QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended August 31, 2013

or

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-35598

E2open, Inc.

(Exact name of registrant as specified in its charter)

Delaware

94-3366487

(State or other jurisdiction ofincorporation or organization)

(I.R.S. Employer

Identification Number)

4100 East Third Avenue, Suite 400

Foster City, California 94404

(Address of principal executive offices)

(650) 645-6500

Registrants telephone number, including area code

Indicate by check mark whether
the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act.

Large accelerated filer

¨

Accelerated filer

¨

Non-accelerated filer

x (Do not check if a smaller reporting company)

Smaller reporting company

¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes ¨ No x

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.

There were 26,507,320 shares of the registrants Common Stock issued and outstanding as of September 30, 2013.

This Quarterly Report on Form 10-Q contains forward-looking statements that are based on our managements beliefs and assumptions and on
information currently available to our management. The forward-looking statements are contained principally in, but not limited to, the sections entitled Business, Risk Factors, and Managements Discussion and
Analysis of Financial Condition and Results of Operations. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as anticipates, believes, could,
seeks, estimates, expects, intends, may, plans, potential, predicts, projects, should, will, would or
similar expressions and the negatives of those terms. Forward-looking statements include, but are not limited to, statements about:

Our anticipated trends and challenges in the markets in which we operate;



Our competition;



Our ability to successfully enter new markets and manage our international expansion; and



Our intellectual property.

Forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We discuss these
risks in greater detail in the section entitled Risk Factors and elsewhere in this Quarterly Report on Form 10-Q. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking
statements represent our managements beliefs and assumptions only as of the date of this Quarterly Report on Form 10-Q. You should read this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may
be materially different from what we expect.

Except as required by law, we assume no obligation to update these forward-looking
statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

E2open, Inc. and subsidiaries (the Company), a Delaware corporation, was incorporated in September 2003. The Company
provides cloud-based, on-demand software solutions delivered on an integrated platform that enables companies to collaborate with their trading partners to procure, manufacture, sell and distribute products more efficiently. The Companys
customers depend on outsourced manufacturing strategies and complex trading networks to compete in todays global economy. They use the Companys solutions to gain visibility into and control over their trading networks. The Companys
solutions enable its customers and their trading partners to overcome problems arising from communications across disparate systems by offering a reliable source of data, processes and analytics, which its customers rely on as the single version of
the truth. The Companys solutions empower its customers to manage demand they cannot predict and supply they do not control.

The
Company acquired ICON-SCM AG (ICON) on July 30, 2013 (see note 3 to the condensed consolidated financial statements).

The
Companys corporate headquarters are located in Foster City, California, with additional offices in San Jose, California, Austin and Dallas, Texas, China, France, Germany, Malaysia, Finland, Taiwan and the United Kingdom.

(2) Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements are presented in accordance with United States generally accepted accounting
principles (U.S. GAAP). The consolidated financial statements include the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. All intercompany balances and
transactions have been eliminated in consolidation. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the United States of America (US
GAAP) have been condensed or omitted under the rules and regulations of the Securities and Exchange Commission (SEC).

Unaudited Interim Financial
Information

The accompanying condensed consolidated balance sheet as of August 31, 2013, the interim condensed consolidated
statements of operations and comprehensive income (loss) for the three and six months ended August 31, 2013 and 2012, and the interim condensed consolidated statements of cash flows for the six months ended August 31, 2013 and 2012 and the
related footnote disclosures are unaudited. These unaudited interim financial statements have been prepared in accordance with U.S. GAAP. In managements opinion, the unaudited interim financial statements have been prepared on the same basis
as the audited consolidated financial statements and include all adjustments of a normal recurring nature necessary for the fair presentation of the Companys statement of financial position and operating results for the periods presented. The
results for the three and six months ended August 31, 2013 are not necessarily indicative of the results expected for the full fiscal year or any other period.

Accounting Policies

The
accompanying unaudited interim condensed consolidated financial statements and accompanying related notes should be read in conjunction with the consolidated financial statements and related notes included in the Companys Annual Report on Form
10-K for the year ended February 28, 2013. There have been no changes in the Companys significant accounting policies during the six months ended August 31, 2013 compared to such policies described in the audited consolidated
financial statements included in Companys Annual Report on Form 10-K for year ended February 28, 2013 except for the adoption of the following policies in connection with the acquisition of ICON:

Acquisition Related ExpensesAcquisition related expenses consist of third-party accounting and legal service fees,
personnel-related expenses, travel expenses and other expenses incurred solely to prepare for and execute the acquisition of a business or an asset group.

GoodwillGoodwill represents the excess of the purchase price over the estimated fair value of the net tangible and intangible
assets of acquired entities. The Company performs a goodwill impairment test annually during the fourth quarter of the fiscal year and more frequently if an event or circumstance indicates that impairment may have occurred. Triggering events that
may indicate a potential impairment include but are not limited to significant adverse change in customer demand or business climate, obsolescence of acquired technology and related competitive considerations.

The Company performs a goodwill impairment test in accordance with Account Standards Update (ASU) 2011-08, Intangibles 
Goodwill and Other: Testing Goodwill for Impairment, which allows the Company to make a qualitative assessment to determine whether it is more likely than not that goodwill is impaired before applying the two-step goodwill impairment test. If
the conclusion is that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company then performs a two-step goodwill impairment test. Under the first step, the fair value of the reporting unit is
compared with its carrying value, and, if an indication of goodwill impairment exists for the reporting unit, the Company must perform step two of the impairment test (measurement). Under step two, an impairment loss is recognized for any excess of
the carrying amount of the reporting units goodwill as determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation. The residual fair value after this allocation is the implied fair value of
the reporting unit goodwill. If the fair value of the reporting unit exceeds its carrying value, step two does not need to be performed. If the carrying amount of goodwill exceeds the implied fair value of that goodwill, an impairment loss is
recognized in an amount equal to that excess. The Company did not record any charges related to goodwill impairment for the three and six months ended August 31, 2013.

Intangible assetsIntangible assets are carried at cost less accumulated
amortization, and are amortized using the straight-line method over their estimated useful lives, ranging up to 20 years. Significant judgment is required in estimating the fair value of intangible assets and in assigning their respective useful
lives. The fair value estimates are based on available historical information and on future expectations and assumptions deemed reasonable by management but are inherently uncertain. Critical estimates in valuing the intangible assets include, but
are not limited to, forecasts of the expected future cash flows attributable to the respective assets, anticipated growth in revenue from the acquired customer and product base, and the expected use of the acquired assets.

Accounting Updates

In February
2013, the FASB issued ASU 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (ASU 2013-02). FASB issued ASU 2013-02 to improve the transparency of changes in other
comprehensive income (OCI) and items reclassified out of accumulated other comprehensive income (AOCI) in financial statements. ASU 2013-02 requires an entity to provide information about amounts reclassified out of AOCI by
component. In addition, an entity must present either on the face of the income statement or in the notes, significant amounts reclassified out of AOCI by the respective line items of net income. The reclassifications out of AOCI, and related tax
impact, are not material to the Companys condensed consolidated results of operations or financial position.

Use of Estimates

The preparation of the Companys condensed consolidated financial statements in conformity with U.S. GAAP requires management to make
certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported results of operations
during the reporting period. Such estimates include the allowance for doubtful accounts receivable, deferred tax asset valuation allowance, unrecognized tax benefits, fair value of acquired net assets including intangibles, accrued liabilities, and
stock-based compensation. Actual results could differ from those estimates.

The Company generates revenue from the sale of subscriptions and support and professional services.

Subscriptions and Support. The Company offers on-demand software solutions, which enable its customers to have constant access to its
solutions without the need to manage and support the software and associated hardware themselves. The Company houses the hardware and software in third-party facilities, and provides its customers with access to the software solutions, along with
data security and storage, backup and recovery services and solution support. The Companys customer contracts typically have a term of three to five years. The Company invoices its customers for subscriptions and support in advance for annual
use of the software solutions. The Companys payment terms typically require customers to pay within 30 to 90 days from the invoice date.

Professional Services. Professional services revenue is derived primarily from fees for enabling services, including solution
consulting and solution deployment. These services are sold in conjunction with the sale of the Companys on-demand software solutions. The Company provides professional services, both on a fixed fee and a time and materials basis, and invoices
customers either in advance, monthly, or upon reaching project milestones.

The Company enters into arrangements with multiple elements,
comprised of subscriptions and support and professional services. Arrangements with customers typically do not provide the customer with the right to take possession of the software supporting the on-demand solutions. The Company commences revenue
recognition when all of the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the Companys price to the customer is fixed or determinable, and collectability of the
fees is reasonably assured.

The Company evaluates each of these criteria as follows:

Evidence of an Arrangement . The Company considers a binding agreement signed by it and the customer to be evidence of an arrangement.

Delivery . The Company typically considers delivery to have occurred when the on-demand software solutions are made available to
the customer or services have been rendered. In arrangements where an existing customer purchases additional solutions, delivery occurs upon commencement of the contractual term.

Fixed or Determinable Fee . The Company considers the fee to be fixed or determinable unless the fee is subject to refund or adjustment
or is not payable within its standard payment terms. If the fee is not fixed or determinable, the Company recognizes the revenue as amounts become due and payable.

Collectability of the Fees is Reasonably Assured . Collectability of the fees is reasonably assured if the Company expects that the
customer will be able to pay amounts under the arrangement as payments become due. If the Company determines that collection is not reasonably assured, the Company defers the recognition of revenue until cash collection.

The Company accounts for subscriptions and support and professional services revenue as separate units of accounting and allocates revenue to
each deliverable in an arrangement based on a selling price hierarchy. As the Company has been unable to establish vendor specific objective evidence (VSOE) or third party evidence (TPE) for the elements of its arrangements, the Company determines
the estimated selling price (ESP) for each element primarily by considering prices the Company charges for similar offerings, size of the order and historical pricing practices. Revenue allocated to subscriptions and support is recognized over the
contractual term. Professional services revenue sold on a fixed fee basis is recognized either under the proportional performance method of accounting using estimated labor hours, or upon acceptance of the services. Revenue from professional
services sold on a time and material basis is recognized as services are delivered.

The Company acquired ICON on July 30, 2013. Historically, ICON
sold perpetual or term licenses and related post-contract support (PCS) and professional services. During the post-acquisition period of approximately one month, all revenue recognized from legacy ICON revenue arrangements represented primarily
post-contract support or professional services.

Accounting for the Impairment of Long-Lived Assets

The Company evaluates the recoverability of its long-lived assets, which consist principally of property and equipment and acquired intangible
assets with finite lives, whenever events or circumstances indicate that the carrying amount of these assets may not be recoverable. Recoverability of an asset is measured by comparing the carrying amount to the expected future undiscounted cash
flows that the asset is expected to generate. If that review indicates that the carrying amount of the long-lived asset is not recoverable, an impairment loss is recorded for the amount by which the carrying amount of the asset exceeds its fair
value. The Company did not incur any long-lived asset impairment charges during the three and six month ended August 31, 2013 and 2012.

On July 30, 2013, the Company acquired all of the outstanding shares of ICON, a market leader in supply chain planning
and collaboration, for approximately $26.6 million. The total initial purchase consideration comprised the following (in thousands):

Cash payment

$

12,412

Acquisition costs payable to seller, to be placed in escrow

5,309

451,593 shares of the Companys common stock

8,849

Total

$

26,570

Transaction costs of $0.8 million associated with the acquisition of ICON were expensed as incurred and
presented as Acquisition-related expenses as a part of operating expenses on our condensed consolidated statements of operations for the three and six months ended August 31, 2013.

Allocation of Consideration Transferred

The identifiable assets acquired and liabilities assumed were recognized and measured as of the acquisition date based on their estimated fair
values. The excess of the fair value of consideration transferred over estimated fair value of the net tangible assets and intangible assets was recorded as goodwill.

The Company is accounting for the ICON acquisition under the purchase method of accounting as a business combination. The following table
summarizes the preliminary estimates of fair values of the assets and liabilities assumed at the acquisition date based on the preliminary purchase price allocation. The Company is in the process of validating and refining the assumptions and
estimates required in establishing the fair values of the identifiable assets and liabilities, including identifiable intangible assets. The final purchase price allocation may differ from the preliminary amounts disclosed below (in thousands):

Cash and cash equivalents

$

923

Accounts receivable

1,274

Prepaid expenses and other current assets

219

Long-term investments

354

Property and equipment

61

Identifiable intangible assets

12,900

Other assets

227

Total identifiable assets acquired

15,958

Accounts payable and accrued liabilities

(3,080

)

Deferred revenue

(1,154

)

Convertible bond and long-term debt

(7,126

)

Deferred tax liability

(3,689

)

Other noncurrent liabilities

(47

)

Total liabilities assumed

(15,096

)

Net identifiable assets acquired

862

Goodwill

25,708

Total consideration

$

26,570

The key factor attributable to the creation of goodwill by the transaction is that, by combining ICONs
integrated planning and analytics capabilities with the Companys Business Network, the Company expands its market opportunity and solution portfolio, accelerates its product roadmap, and extends its position as the leader in the collaborative
planning and execution space.

As of the date of acquisition, the identifiable intangibles are comprised of developed technology of
approximately $7.0 million and a customer relationship intangible of approximately $5.9 million. The Company is currently evaluating the expected useful life of these identifiable intangible assets and they may range up to 20 years. The amortization
for the post acquisition period of approximately one month was not material to consolidated financial statements.

ICONs results of
operations have been included in our condensed consolidated financial statements subsequent to the date of acquisition. Revenue earned by ICON was $1,062,000 for the period from the acquisition date of July 30, 2013 to August 31, 2013.
Immediately following the acquisition, ICONs operations in the United States were merged into the Companys operations, as such, the standalone ICON net income (loss) post-acquisition is not readily determinable. The unaudited pro forma
Revenue and Net Loss for six months ended August 31, 2013 presented below combine the consolidated results of the Company and ICON giving effect to the acquisition of ICON

as if it had been completed on March 1, 2012, the beginning of the annual reporting period prior to the year of acquisition. The unaudited pro forma financial results presented below do not
include any anticipated synergies or other expected benefits of the acquisition. This unaudited pro forma financial information is presented for informational purposes only and is not indicative of future operations or results had the acquisition
been completed as of March 1, 2012. The unaudited pro forma financial results include certain adjustments for additional depreciation and amortization expense based upon the fair value step-up and estimated useful lives of ICONs
amortizable assets acquired in the transaction, adjustments to net interest expense based upon settlement of debt assumed upon acquisition, and adjustments to net income to reflect the decrease of interest income arising from the reduction of
investments in available-for-sale securities. The provision for income taxes from continuing operations has also been adjusted for all periods, based upon the foregoing adjustments to historical results.

(in thousands, except per share data)

Six Months EndedAugust 31, 2013

Six Months EndedAugust 31, 2012

Pro forma revenue

$

37,442

$

44,321

Pro forma net loss

(13,213

)

(1,700

)

Pro forma net loss per share:

Basic

(0.50

)

(0.15

)

Diluted

(0.50

)

(0.15

)

(4) Cash and investments

The following table presents cash, cash equivalents and available-for-sale securities for the periods presented (in
thousands):

The available-for-sale securities that the Company intends to hold for less than one year are
classified as short-term investments, and the securities that the Company intends to hold for more than one year are classified as long-term investments.

The following table presents available-for-sale securities, recorded in short-term and long-term investments, by contractual maturity date as
of August 31, 2013 (in thousands):

AmortizedCost

EstimatedFair MarketValue

Due in one year or less

$

3,738

$

3,735

Due after one year through two years

4,874

4,871

Total

$

8,612

$

8,606

For the three and six months ended August 31, 2013, the realized gains and losses, and unrealized losses
on these available-for-sale securities were not material. Additionally, none of these securities were in a continuous unrealized loss position for more than 12 months. As of August 31, 2013, the Company did not consider any of its
available-for-sale securities to be other-than-temporarily impaired.

Consolidated balance sheet components as of the dates presented comprised the following (in thousands):

August 31,2013

February 28,2013

Prepaid expenses and other current assets:

Prepaid software license fees, hardware and software maintenance

$

1,562

$

1,109

Other prepaid expenses and other current assets

1,572

1,103

$

3,134

$

2,212

Software licenses, maintenance, services and insurance premiums financed through capital leases and notes
payable included above aggregated $3,462,000 and $1,615,000 as of August 31, 2013 and February 28, 2013. Accumulated amortization on software licenses aggregated $792,000 and $344,000 as of August 31, 2013 and February 28, 2013.
Amortization of software licenses held under capital leases and notes payable is included in software license expense. Prepaid maintenance and insurance are expensed over the term of the agreements.

Property and equipment financed through capital leases and notes payable included above aggregated $2,338,000
and $662,000 as of August 31, 2013 and February 28, 2013. Accumulated depreciation and amortization on these assets aggregated $422,000 and $100,000 as of August 31, 2013 and February 28, 2013.

The Company financed the purchase of certain equipment, software and related support and maintenance with notes payable and
capital leases. The terms of the notes payable are from nine months to three years, and the notes bear interest at rates ranging from 3.03% to 13.13% per annum. The total principal payments remaining under the notes payable and capital lease
obligations of $4,069,000 as of August 31, 2013 as follows (in thousands):

Fiscal year ending:

2014 (remaining 6 months)

$

1,250

2015

1,997

2016

1,157

Total minimum lease payments

4,404

Less: amount representing interest

(335

)

Present value of minimum lease payments

4,069

Less: current portion

(2,180

)

Total, net of current portion

$

1,889

(7) Related Party Transactions

One of the Companys directors, Patrick J. OMalley, III, is the Chief Financial Officer of Seagate
Technology Public Limited Company, or Seagate PLC. Seagate LLC, a wholly owned subsidiary of Seagate PLC (Seagate), is one of the Companys customers and the Company received payments from Seagate of $242,000 and $484,000 for the three months
ended August 31, 2013 and 2012, and $1,275,000 and $905,000 for the six months ended August 31, 2013 and 2012. The Company has outstanding receivable from Seagate of $1,550,000 and $1,031,000 as of August 31, 2013 and February 28, 2013.

(8) Commitments and Contingencies

Acquisition cost payable to seller, to be placed in an escrow

In accordance with the share purchase agreement for the acquisition of ICON, the Company will place in escrow $5,309,000 payable to ICONs
former shareholders. The amount in escrow will be released to ICONs former shareholders on July 31, 2014, the escrow expiration date, net of claims arising during the escrow period. The Company and the former shareholders have not
selected the escrow agent as of August 31, 2013.

Leases

The Company leases its primary office space under noncancelable operating leases with various expiration dates through July 2018. Rent expense was $632,000 and
$459,000 for the three months ended August 31, 2013 and 2012, and $1,228,000 and $885,000 for the six months ended August 31, 2013 and 2012. Future minimum lease payments under noncancelable operating leases as of August 31, 2013 are
as follows (in thousands):

Fiscal year ending:

2014 (remaining 6 months)

$

1,246

2015

2,172

2016

1,678

2017

1,564

2018

1,449

Thereafter

540

Total minimum lease payments

$

8,649

Several of the operating lease agreements require the Company to provide security deposits. As of
August 31, 2013 and February 28, 2013, lease deposits totaled $420,000 and $335,000. The deposits are generally refundable at the expiration of the lease, assuming all of the Companys obligations under the lease agreement have been
met, and are included in other assets in the condensed consolidated balance sheets.

From time to time, the Company is subject to contingencies that arise in the ordinary course of business. The Company records an accrual for a
contingency when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company does not currently believe the resolution of any such contingencies will have a material effect upon the
Companys financial position, results of operations or cash flows.

(9) Interest and other income (expense), net

Interest and other income (expense), net for the periods presented consisted of the following (in thousands):

The Company records its interim provision for income taxes based on its estimated annual effective tax rate for the year.
The income tax provision for the three months ended August 31, 2013 and 2012 was $35,000 and $32,000, and for the six months ended August 31, 2013 and 2012 was $74,000 and $75,000. The Company has incurred operating losses for most years
since inception. As of February 28, 2013, it had net operating loss, or NOL, carryforwards for federal income tax purposes of $318,323,000, which begin to expire in fiscal 2023, and had NOL carryforwards for state income tax purposes of
$100,320,000, which begin to expire in fiscal 2014. In order to utilize the NOLs, the Company must generate consolidated taxable income which can offset such carryforwards. The deferred tax asset associated with the NOLs is $93,992,000. As a result
of those continuing losses, management has determined that insufficient evidence exists to support that it is more likely than not that the Company will realize the benefits of its U.S. net deferred tax assets and therefore has recorded a valuation
allowance to reduce the net carrying value of these deferred tax assets to zero. Accordingly, the Company has not recorded a provision for income taxes for any of the periods presented other than provisions for estimated federal alternative minimum
taxes, state and foreign taxes, as well as income taxes in foreign jurisdictions. The Companys effective tax rate differs from the statutory rate due primarily to valuation allowances on deferred taxes, state taxes, foreign taxes, and tax
contingencies.

As of August 31, 2013, the Company has recorded a $3,689,000 noncurrent deferred tax liability in connection with the
acquisition of ICON. The deferred tax liability represents primarily the tax effect of the difference between the estimated fair value of the acquired intangible assets and the tax basis ($0) of such assets. The estimated amount is determined by
multiplying the difference by the German marginal tax rate of 29%.

The Company is subject to income tax in the United States as well as
other tax jurisdictions in which it conducts business. Earnings from non-U.S. activities are subject to local country income taxes. The Company does not provide for federal income taxes on the undistributed earnings of its foreign subsidiaries as
such earnings are expected to be reinvested indefinitely. There is $813,000 of undistributed earnings of the Companys foreign subsidiaries as of August 31, 2013. It is not practicable to determine the income tax liability that might be
incurred if these earnings were to be repatriated.

As of February 28, 2013, the total amount of gross unrecognized tax benefits was
$4,500,000, of which $300,000, if recognized, would affect the Companys effective tax rate. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense. The total amount of gross
interest and penalties accrued was $68,000 as of February 28, 2013, and was classified as other noncurrent liabilities in the consolidated balance sheets. The Company believes that it has adequately provided for any adjustments that may result
from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. The Company is not currently under examination or audit by any taxing authorities. For the six months ended August 31, 2013, there has been no
material change in the total amount or composition of the Companys unrecognized tax benefits. The Company is subject to taxation in the U.S., various states and foreign jurisdictions. The 2000 to 2013 tax years statutes of limitations
generally remain open and are subject to U.S. federal and state tax examinations. The statutes of limitations in foreign jurisdictions range from four to seven years, and the open tax years subject to examination are from 2007 to 2013.

In June 2012, the Board adopted the 2012 Stock Plan (2012 Plan), which was subsequently approved by the Companys stockholders. Upon the
completion of the IPO, all shares that were reserved under the 2003 Stock Plan but not issued were assumed by the 2012 Plan. No additional shares will be issued under the 2003 Plan. Under the 2012 Plan, the Company has the ability to issue incentive
stock options (ISOs), nonstatutory stock options (NSOs), stock appreciation rights, restricted stock, restricted stock units (RSUs), performance units and performance shares. No awards under the 2012 Plan were granted prior to the Companys
IPO. As of August 31, 2013 and February 28, 2013, there were 5,819,041 and 5,112,830 shares of common stock reserved for issuance under the 2012 Plan.

Options under the 2012 Plan may be granted for periods of up to 10 years; provided, however, that (i) the exercise price of an ISO and
NSO shall not be less than 100% of the estimated fair value of the shares of common stock on the date of grant, and (ii) the exercise price of an ISO granted to a 10% stockholder shall not be less than 110% of the estimated fair value of the
underlying shares on the date of grant. Options generally vest 25% on the one-year anniversary of the option grant date, and then monthly for three additional years, or monthly for a period of four years, and are exercisable for a period of 10 years
after the date of grant. RSUs generally vest 25% on the first annual anniversary of the award grant date, and 25% each year thereafter on the annual anniversary of the award grant date for three additional years.

Some options granted are immediately exercisable and any unvested portion of the shares acquired upon early exercise is subject to a right of
repurchase by the Company upon the employees termination at the original purchase price. The right of repurchase lapses as the options vest, which is generally over the four-year vesting period of the related options. As of February 28,
2013, there were 18,761 shares exercised that were subject to repurchase. The $6,566 aggregate exercise price of the options subject to repurchase as of February 28, 2013 is recorded in other noncurrent liabilities and is amortized to equity as
the options vest. As of August 31, 2013, all of the early-exercised options have vested.

The determination of the fair value of
stock-based payment awards on the date of grant using a pricing model is affected by the Companys stock price as well as by certain assumptions including the Companys expected stock price volatility over the term of the awards, actual
and projected employee stock option exercise behavior, risk-free interest rates, and expected dividends. The estimated grant date fair values of the employee stock options were calculated using the Black Scholes valuation model, based on the
following assumptions:

Three Months EndedAugust 31,

Six Months EndedAugust 31,

2013

2012

2013

2012

Expected term (in years)

6.04

6.08

5.91

5.96

Expected stock price volatility

50.96%

50.0%

50.96% - 51.76%

50.0% - 55.0%

Risk-free interest rate

1.63% - 1.81%

0.9%

0.73% - 1.81%

0.9% - 1.3%

Expected dividend yield









The expected term represents the period that stock-based awards are expected to be outstanding, giving
consideration to the contractual terms of the stock-based awards, vesting schedules, and expectations of future employee behavior as influenced by changes to the terms of the Companys stock-based awards. The Company estimated the expected
term, using the simplified method due to limited exercise data, to be the period of time between the date of grant and the midpoint between option vesting and expiration. The Company estimated the expected volatility of its common stock based on the
average of historical and implied volatility of comparable companies from a representative peer group based on industry and market capitalization data. The risk-free interest rate represents the yield on a constant maturity U.S. Treasury security
with a term equal to the expected term of the options. Expected dividend yield is set at 0% because the Company does not expect to pay dividends during the term of the option, and historically has not paid any dividends to its stockholders.
Management made an estimate of expected forfeitures and is recognizing compensation costs only for those equity awards expected to vest.

In July 2011, the Company awarded 749,464 stock options that were subject to certain financial performance requirements to be achieved by
February 28, 2013, before vesting could occur. The vesting of these stock options was also dependent upon the employees continued employment after February 28, 2013. In March 2012, the Board of Directors approved a modification
of the financial performance requirements. At the date of the modification, the Company determined that the achievement of the modified performance requirements was probable and, accordingly, compensation cost related to the modified awards of
$149,000 was recorded in the condensed consolidated statement of operations for the three months ended May 31, 2012. Prior to this date, the Company had not recognized compensation expense associated with these grants because the Company
believed that, based on the then-current and expected operational results, it was not probable that the associated financial performance requirements would be achieved. The financial performance requirements were achieved by February 28, 2013.
The unrecognized compensation cost related to these options is $1,368,000 as of August 31, 2013, and is being recognized over the remaining vesting term of three years from February 28, 2013.

In July 2013, the Company awarded 125,250 restricted stock units that are subject to certain
financial performance requirements to be achieved by February 28, 2014, before vesting can occur. The vesting of these stock options is also dependent upon the employees continued employment after February 28, 2014. The Company
determined that, based on current and expected achievement of the performance requirements, certain of these awards are probable of vesting. Accordingly, compensation cost related to the awards deemed probable of vesting amounting to $116,000 was
recorded in the condensed consolidated statement of operations for the three and six months ended August 31, 2013. The unrecognized compensation cost related to the awards is $1,419,000 as of August 31, 2013, and is being recognized over
the remaining vesting term of two years from September 1, 2013.

Stock option activity under the Companys 2012 Plan for the years presented is as follows:

Number ofshares

Weightedaverageexerciseprice

Weightedaverageremainingterm

Balance of options outstanding, February 28, 2013

2,674,335

$

4.59

8.00 years

Options granted

623,575

18.35

Options exercised

(565,808

)

2.08

Options canceled and forfeited

(331,386

)

4.68

Balance of options outstanding, August 31, 2013

2,400,716

8.75

8.25 years

Balance of options expected to vest as of February 28, 2013

2,485,050

4.41

7.94 years

Balance of options exercisable as of February 28, 2013

1,005,204

2.68

7.03 years

Balance of options expected to vest as of August 31, 2013

2,315,813

8.60

8.23 years

Balance of options exercisable as of August 31, 2013

766,623

4.91

7.36 years

The weighted average grant date fair value of the employee stock options granted during the three months ended
August 31, 2013 and August 31, 2012 was $18.63 and $16, and for the six months ended August 31, 2013 and August 31, 2012 was $18.35 and $10.04.

The intrinsic values of employee stock options exercised during the three months ended August 31, 2013 and August 31, 2012 was
$4,455,000 and $1,356,000, and for the six months ended August 31, 2013 and August 31, 2012 was $8,770,000 and $1,957,000. The intrinsic values of vested shares as of August 31, 2013 and February 28, 2013 were $11,743,000 and
$17,168,000.

As of August 31, 2013, and February 28, 2013 the number of unvested options was 1,634,093 and 1,669,131.

As of August 31, 2013 and February 28, 2013, the Company had $7,173,000 and $5,370,000 of unrecognized compensation cost excluding
estimated forfeitures, related to unvested stock option awards, which is expected to be recognized over a weighted average period of 2.64 years and 2.28 years.

Restricted Stock Units:

The RSU activity
under the Companys 2012 Plan for the years presented is as follows:

Number ofshares

Weightedaverage grantdate fair valueper share

Weightedaverageremaining term

Balance of awards outstanding, February 28 2013

118,500

$

14.42

3.62 years

Awards granted

172,714

17.86

Awards released





Awards canceled and forfeited

(16,000

)

16.61

Balance of awards outstanding, August 31, 2013

275,214

$

16.45

2.46 years

Balance of awards expected to vest, February 28, 2013

92,136

$

14.42

3.62 years

Balance of awards vested, February 28, 2013



$





Balance of awards expected to vest, August 31, 2013

254,192

$

16.45

2.46 years

Balance of awards vested, August 31, 2013



$





The weighted average grant date fair value per share of the RSUs granted during the three months ended
August 31, 2013 and August 31, 2012 was $19.26 and $0, and for the six months ended August 31, 2013 and August 31, 2012 was $17.86 and $0.

The intrinsic value of outstanding RSUs as of August 31, 2013 and February 28, 2013 was $5,568,000 and $2,342,000.

Total compensation expense for these awards recorded in the condensed consolidated statement of operations for the three months ended
August 31, 2013 and August 31, 2012 was $260,000 and $0, and for the six months ended August 31, 2013 and August 31, 2012 was $390,000 and $0. As of August 31, 2013, none of the awards were vested or released. As of
August 31, 2013 and February 28, 2013, the Company had $3,151,000 and $1,162,000 of unrecognized compensation expense related to these RSUs, which is expected to be recognized over a weighted average period of 2.46 years and 3.62 years.

Total compensation expense recorded for share-based payments for the three months ended August 31, 2013 and August 31, 2012 was
$1,718,000 and $482,000, and for the six months ended August 31, 2013 and August 31, 2012 was $2,563,000 and $961,000. No compensation cost was capitalized during the three and six months ended August 31, 2013 and August 31,
2012.

Basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted-average number of
common shares outstanding during the period. Diluted net income per share is computed by dividing the net income by the weighted-average number of common shares outstanding, including potential dilutive common shares assuming the dilutive effect of
outstanding stock options, restricted stock units and warrants using the treasury stock method. For periods in which the Company has generated a net loss, the Company does not include stock options, warrants, and unvested restricted stock units in
its computation of diluted net income (loss) per share, as the impact of these awards is anti-dilutive.

The following table sets forth
the computation of basic and diluted net loss per share (in thousands, except share and per share data):

Three Months Ended August 31,

Six Months Ended August 31,

2013

2012

2013

2012

Net income (loss)

$

(5,923

)

$

4,566

$

(11,317

)

$

2,188

Basic shares:

Weighted average common shares outstanding

26,018

13,875

25,822

10,606

Diluted shares:

Weighted average common shares outstanding



13,875



10,606

Weighted average effect of dilutive stock options



1,671



1,640

Weighted average effect of convertible preferred stock



8,875



11,860

26,018

24,421

25,822

24,106

Net income (loss) per share:

Basic

$

(0.23

)

$

0.33

$

(0.44

)

$

0.21

Diluted

$

(0.23

)

$

0.19

$

(0.44

)

$

0.09

The following outstanding shares, options, restricted stock units and warrants were excluded from the
computation of diluted net income per share in the periods presented because including them would have had an anti-dilutive effect (in thousands):

The Companys financial instruments include cash and cash equivalents, investments, accounts receivable, net, accounts
payable, payable to ICON shareholders, capital lease obligations and notes payable. Accounts receivable, net, accounts payable and payable to ICON shareholders are stated at their carrying value, which approximates fair value, due to their short
maturity. The Company measures its cash equivalents, investments and foreign currency forward contracts at fair value based on an exchange or exit price as defined by the authoritative guidance on fair value measurements which represents the amount
that would be received for an asset sale or an exit price, or paid to transfer a liability in an orderly transaction between knowledgeable and willing market participants. The Company estimates the fair value for capital lease obligations and notes
payable by discounting the future cash flows of the lease and note payments.

As a basis for considering such assumptions, accounting guidance establishes a three-tier value
hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1



Observable inputs such as quoted prices in an active market;

Level 2



Inputs other than the quoted prices in active markets that are observable either directly or indirectly; and

Level 3



Unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions.

Observable inputs are based on market data obtained from independent sources. Unobservable inputs reflect the
Companys assessment of the assumptions market participants would use to value certain financial instruments. This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when
determining fair value.

The Companys assets and liabilities that are measured at fair value on a recurring basis, by level, within
the fair value hierarchy as of August 31, 2013 and February 28, 2013, are summarized as follows (in thousands):

August 31, 2013

February 28, 2013

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

Assets:

Cash equivalents:

Money market accounts

$

4,929

$



$



$

4,929

$

2,501

$



$



$

2,501

Money market funds

2,095





2,095

3,879





3,879

Commercial paper











12,446



12,446

Short-term investments:

Commercial paper











12,323



12,323

Corporate debt securities



1,593



1,593



2,375



2,375

Asset backed securities



1,286



1,286









Mortgage backed securities



506



506



591



591

Municipal bonds



350

350









Other current assets:

Foreign currency forward contracts











4



4

Long-term investments:

Corporate debt securities



2,091



2,091



5,990



5,990

Asset backed securities



928



928



3,046



3,046

Mortgage backed securities



443



443



1,805



1,805

Municipal bonds



1,285



1,285



851



851

Common trust fund



109



109









Insurance Company Contract



15



15









Other noncurrent assets:

Certificate of deposit

16





16

16





16

Total assets

$

7,040

$

8,606

$



$

15,646

$

6,396

$

39,431

$



$

45,827

Liabilities:

Other current liabilities:

Foreign currency forward contracts



(170

)



(170

)



(158

)



(158

)

Total liabilities

$



$

(170

)

$



$

(170

)

$



$

(158

)

$



$

(158

)

The fair value of the Companys Level 1 financial instruments, which are traded in active markets, are
based on quoted market prices for identical instruments. The fair value of the Companys Level 2 financial instruments are based on quoted market prices for comparable instruments or model driven valuations using observable market data or
inputs corroborated by observable market data. The Companys foreign currency forward contracts are valued using pricing models that use observable market inputs and, therefore, are classified as Level 2.

In fiscal 2013 and the six months ended August 31, 2013, the Company sought to hedge the
risks associated with exchange rate fluctuations through entry into forward exchange contracts. The contracts are classified as Level 2. The tables below present the notional amounts (at the contract exchange rates), the weighted-average contractual
foreign currency exchange rates, and the estimated fair value of contracts outstanding as of August 31, 2013 and February 28, 2013 (in USD thousands, except average contract rate):

August 31, 2013

February 28, 2013

NotionalSell(Buy)

AverageContractRate

EstimatedFairValue

NotionalSell(Buy)

AverageContractRate

EstimatedFairValue

Foreign currency forward exchange contracts:

Euro

$

5,935

1.3

$

(63

)

$

7,322

1.3

$

(146

)

Malaysian Ringgit

(5,706

)

3.1

(50

)

(2,255

)

3.1

(8

)

British Pound

(973

)

1.5

(57

)







Total

$

(744

)

$

(170

)

5,067

$

(154

)

The Company entered into the foreign exchange contracts with two counterparties. The Company has the right of
offset for gains earned and losses incurred under contracts with the same counterparty, and therefore has recorded contracts with the same counterparty on a net basis in the balance sheet.

The Company does not use derivatives for speculative or trading purposes.

(14) Significant Customer Information

Customers accounting for 10% or more of revenue or accounts receivable were as follows:

Three months endedAugust 31, 2013

Three months endedAugust 31, 2012

Six months endedAugust 31, 2013

Six months endedAugust 31, 2012

Percentageof totalrevenue

Percentageofaccountsreceivable

Percentageof totalrevenue

Percentageofaccountsreceivable

Percentageof totalrevenue

Percentageofaccountsreceivable

Percentageof totalrevenue

Percentageofaccountsreceivable

Customer A

*

*

13

%

13

%

*

*

12

%

13

%

Customer B

*

*

28

*

*

*

22

*

Customer C

*

*

*

15

*

*

*

15

Customer D

*

17

%

*

14

*

17

%

*

14

Customer E

*

20

*

*

*

20

*

*

*

Indicates less than 10%

Revenue by geographic region, based on the billing address of the
customer, was as follows (in thousands):

On October 7, 2013, the Company entered into a Business Financing Agreement for a revolving loan facility with a
borrowing capacity of up to $20,000,000, with availability to be subject to a borrowing formula, and secured by the Companys accounts receivable and contracted backlog. The revolving loan facility bears interest at a per annum rate equal to
the Wall Street Journal prime rate minus 0.25%, with a floor for the prime rate of 3.25%. The revolving loan facility is a general obligation of the Company secured by the Companys tangible and intangible assets, as well as a negative pledge
whereby the Company agrees not to give any creditor a security interest on the Companys intellectual property.

Managements Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed
consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the SEC) dated April 30, 2013 (the
Annual Report). The following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ
materially from those expressed or implied by such forward-looking statements. Statements that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities
Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). Forward-looking statements are often identified by the use of words such as, but not limited to, anticipate,
believe, can, continue, could, estimate, expect, intend, may, plan, potential,, predict, if,
future, project, seek, should, target, will, would and similar words and phrases, including the negatives of these terms, or other expressions or variations intended
to identify forward-looking statements. Such statements include, but are not limited to, statements concerning market opportunity, our future financial and operating results, investment strategy, sales and marketing strategy, managements
plans, beliefs and objectives for future operations, research and development, economic and industry trends or trend analysis, expectations about seasonality, use of non-GAAP financial measures, operating expenses, taxes, capital expenditures, cash
flows and liquidity. These statements are based on the beliefs and assumptions of our management based on information currently available to us. Such forward-looking statements are subject to risks, uncertainties and other important factors that
could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to,
those identified below, and those discussed in the section titled Risk Factors included under Part II, Item 1A below. Furthermore, such forward-looking statements speak only as of the date of this report. Except as required by
law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

Overview

We are a leading provider of
cloud-based, on-demand software solutions delivered on an integrated platform that enables companies to collaborate with their trading partners to procure, manufacture, sell and distribute products more efficiently. Our software applications allow
network participants to input, access and share data and execute business processes across internal operating units and external entities in a secure, real-time and cost-effective manner. We refer to the combination of our software applications
delivered on our cloud-based platform, the content contributed by our network participants and our enabling services as the E2open Business Network. The E2open Business Network supports key operational business processes of our customers and their
trading partners, including supply chain management, procurement, sales and finance functions. These functions enable our customers to share product information, forecasts, inventory positions, sales orders, purchase orders, manufacturing work
orders, quality and environmental data, shipments, invoices and payments with their trading partners.

The accelerating trends of supply
chain globalization and outsourced manufacturing and distribution have combined to increase complexity and risk for brand owners while decreasing visibility into their expanding and evolving supply chains and distribution networks. These trends have
created a fundamental shift in the way companies source and distribute goods and services. They have led to an ever more complex product and service delivery paradigm which increasingly relies on specialized, globally distributed trading partners to
reduce costs.

As trading networks become more complex, companies are increasingly demanding integrated solutions that facilitate not only
collaborative inventory management, but also the demand and supply forecasts, procurement systems, order management and analytics required to efficiently coordinate a companys entire business ecosystem. We believe a significant opportunity
exists to help companies improve their competitive advantage by delivering the visibility and control once characteristic of vertically integrated companies while retaining the advantages of outsourcing. The ability to navigate modern supply chain
complexities and to resolve problems in a timely and collaborative manner, combined with enhanced knowledge of end customer demand, is critical to enabling businesses to better match supply and demand.

On July 30, 2013, we acquired icon-scm AG (ICON), a market leader in supply chain planning and collaboration, in a
transaction valued at approximately $26.6 million in total consideration. We acquired assets of $15.9 million, including $12.9 million intangible assets, and assumed $15.1 million of liabilities. We recorded goodwill of approximately $25.8 million.
The key factor attributable to the creation of goodwill by the transaction is that, by combining ICONs integrated planning and analytics capabilities with the Companys Business Network, the Company expands its market opportunity and
solution portfolio, accelerates its product roadmap, and extends its position as the leader in the collaborative planning and execution space. As of the date of acquisition, the identifiable intangibles are comprised of developed technology of
approximately $7.0 million and a customer relationship intangible of approximately $5.9 million. We intend to make additional investments outside of the United States in order to expand our geographic reach.

Our agreements with customers are typically three to five years in length with billings in advance for annual use of the software solutions.
The annual contract value for each customer agreement is largely related to the size of the customer, the number of solutions the customer has purchased, the number of the customers unique registered users, and the maturity of our relationship
with the customer. Average annual contract value can therefore fluctuate period to period depending upon the size of new customers and the pace at which we upsell additional solutions and services to existing customers. Additionally, these new and
upsell customer agreements can create significant variability in the aggregate annual contract value of agreements signed in any given fiscal quarter.

As of August 31, 2013, we had 329 customers, of which 101 are what we refer to as Enterprise
Customers who purchase both on-demand software solutions and network connectivity solutions. The remaining 228 customers purchase our network connectivity solutions directly. For the six months ended August 31, 2013, Enterprise Customers
represented 99.4% of total revenue. Our customers represent a wide range of industries and include many of the Fortune 500, among them four of the top five as designated in the Gartner Supply Chain Top 25. The E2open Business Network is a
community comprised of our customers, over 37,000 unique registered trading partners and approximately 117,000 unique registered users.

On July 25, 2012, we sold 4,687,500 shares of common stock to the public (inclusive of 937,500 shares of common stock sold by selling
stockholders). The public offering price of the shares sold in the offering was $15.00 per share. After deducting underwriting discounts and commissions and offering expenses paid by us, the aggregate net proceeds received by us totaled
approximately $49.3 million.

We are headquartered in Foster City, California. We continue to expand our operations internationally. We
currently generate a portion of our revenue outside the United States, including through our offices in the United Kingdom, Germany, China, France, Sweden, Malaysia and Taiwan. For the three months ended August 31, 2013 and 2012, the percentage
of our revenue generated outside of the United States was 20.8% and 47.9%. For the six months ended August 31, 2013 and 2012, the percentage of our revenue generated outside of the United States was 22.8% and 42.6%. As part of our growth
strategy, we expect the percentage of our revenue generated outside of the United States to increase as we invest in and enter new and emerging markets. In 2011, we grew our sales team in Europe. In fiscal 2012, we opened an office and established a
direct sales force and a sales, hosting and distribution alliance with a local partner in China. In fiscal 2013, we opened offices in Paris, France and Scandinavia, and continued to hire sales personnel in the United States, Europe and China. Our
financial objective is to create sustainable revenue, earnings and cash flow growth over the long term. Consistent with this objective, we intend to continue to invest in the development of our solutions and network. We expect to continue the
aggressive expansion of our field sales organization and alliances to market our solutions both in the United States and internationally. We intend to continue making focused investments to upgrade our network infrastructure in order to improve our
ability to profitably scale the business. We intend to further enable partners to deploy E2open solutions. This will allow E2open to grow deployment service capabilities for customers while maintaining focus as a cloud-based software products
company and may mitigate potential constraints on company growth caused by challenges in scaling our own professional services organization. We may also evaluate acquisitions to further augment our strategies and objectives and will base our
evaluation on a number of factors which may include strategic fit, stage of company, price, geography and industry.

We face challenges
and risks related to the growth of our business, similar to other software companies, including the general economic environment, aggressive competition and prospective customers electing to postpone purchase decisions or maintain the status quo. We
also face challenges and risks that may be unique to our own growth initiatives. We mitigate those risks, in part, by creating a balanced portfolio of growth initiatives while managing such risks to the best of our ability based on our prior
experience and operating history. For example, one of our strategies relies upon our entrance into new vertical markets. Through our experience of entering into new markets, such as the Telecommunications, Technology and Consumer Products sectors,
we believe we are better prepared to enter into adjacent markets due to this experience. A subsequent strategy involves expanding our target market to include mid-market customers. We believe our understanding of the complexities surrounding our
existing customers has prepared us for evaluating and transitioning our solutions to be applicable to mid-market customers. Historically, we have collaborated, and will continue to interact, with our existing customers to define our product roadmap
and specific functionalities. Many of our products, which resulted from such collaboration, have been purchased by our customers. For a more detailed analysis of the risks we face, see Risk Factors.

We generate our revenue primarily from selling access to our cloud-based platform of on-demand software solutions, which we refer to as
subscriptions and support, through our field sales organization and alliance partners. We also generate revenue from professional services to deploy our on-demand software solutions. Our customer contracts typically have a term of three to five
years in length and we generally invoice our customers for subscriptions and support in advance for annual use of our software solutions.

Three Months EndedAugust 31,

Six Months EndedAugust 31,

2013

2012

2013

2012

(In thousands)

Revenue by type:

Subscriptions and support

$

13,433

$

11,131

$

25,725

$

20,945

Professional services

4,579

11,760

7,886

17,419

Total

$

18,012

$

22,891

$

33,611

$

38,364

Percentage of revenue by type:

Subscriptions and support

74.6

%

48.6

%

76.5

%

54.6

%

Professional services

25.4

51.4

23.5

45.4

Total

100.0

%

100.0

%

100.0

%

100.0

%

Subscriptions and Support . We offer on-demand software solutions, which enable our customers to have constant
access to our solutions without the need to manage and support the software and associated hardware themselves. We house the hardware and software in third-party facilities, and provide our customers with access to the software applications, along
with data security and storage, backup and recovery services, and solution support. We invoice our customers for subscriptions and support in advance for annual use of our software solutions.

Professional Services . Professional services revenue is derived primarily from fees for enabling services, including solution consulting
and solution deployment. These services are sold in conjunction with the sale of our on-demand software solutions or on a standalone basis. We provide professional services both on a fixed fee and a time and materials basis, and invoice our
customers in advance, monthly, or upon reaching project milestones.

Our future revenue growth will depend on our ability to increase sales of our
existing and new on-demand software solutions and services to new and existing customers. Our revenue generally fluctuates, and we expect it to continue to fluctuate, between periods due primarily to inconsistent timing of sales of our software
solutions, revenue recognition requirements and seasonality, among other factors. As a result, transactions that were expected to be recognized in one period may be recognized in a subsequent period, which may materially affect our financial
performance in a reporting period.

We regularly review a number of metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our
business, formulate financial projections and make strategic decisions.

Bookings, Billings and Backlog . We generally recognize
subscription and support revenue from our customer agreements over the contractual term. For this reason, a significant portion of our revenue in any period will be from customer agreements signed in prior periods rather than new business activity
signed during such period. In order to assess our business performance with metrics that more fully reflect current period business activity, we track bookings, billings and backlog. Bookings represent the full value of customer orders or contracts
signed during a reporting period. The value of our bookings is impacted by new contracts, renewals, amendments and terminations. Billings represent invoices issued to customers during the period. Backlog represents the cumulative value of bookings
existing at the end of the period less the cumulative amount billed to customers. Due to the seasonality of our sales, bookings and backlog fluctuate from quarter to quarter throughout the fiscal year.

Number of Unique Registered Trading Partners. We define the number of unique registered trading partners as the number of distinct
trading partner entities currently connected to the E2open Business Network as of the balance sheet date. We believe the number of unique registered trading partners is a key indicator of the growth of our network and both our ability and our
customers ability to receive the benefits of the network effects resulting from such growth. Growth in the number of unique registered trading partners depends, in part, on our ability to successfully develop and market our solutions to our
existing customers and companies that have not yet become part of our network. In addition to the growth in number of these entities, we view a large, existing network as providing greater incentive and ease for new customers seeking to join if they
share existing trading partners already operating on our system.

The number of unique registered trading partners in the E2open Business Network
increased from 35,302 as of February 28, 2013 to 37,048 as of August 31, 2013. While growth in the number of unique registered trading partners is an important indicator of expected revenue growth, it also informs our management of areas
of our business that will require further investment to support such growth.

Number of Unique Registered Users . We define the number of unique registered users as individuals
within our customers organizations and their trading partners who are currently authorized to use and access our software applications as of a balance sheet date. We view unique registered users as a key indicator of growth and whether we are
providing our customers with useful tools and applications, thereby increasing user engagement. Growth in unique registered users will be driven by our business expansion, growth in the number of unique registered trading partners and improvements
to features and products available to our customers. The number of unique registered users increased from 108,846 as of February 28, 2013 to 117,212 as of August 31, 2013.

We monitor the key financial metrics set forth below as well as cash and cash equivalents and available debt capacity, which are discussed in
Liquidity and Capital Resources, to help us evaluate trends, establish budgets, measure the effectiveness of our sales and marketing efforts and assess operational effectiveness and efficiencies.

Three Months EndedAugust 31,

Six Months EndedAugust 31,

2013

2012

2013

2012

(In thousands)

Revenue

$

18,012

$

22,891

$

33,611

$

38,364

Gross profit

$

10,823

$

17,229

$

19,837

$

27,010

Gross margin

60.1

%

75.3

%

59.0

%

70.4

%

Net income (loss) (1)

$

(5,923

)

$

4,566

$

(11,317

)

$

2,188

Adjusted EBITDA (1)

$

(2,831

)

$

5,635

$

(6,988

)

$

4,283

Operating cash flow

$

(4,087

)

$

5,584

$

(7,383

)

$

(6,407

)

Free cash flow (2)

$

(4,145

)

$

(5,977

)

$

(7,480

)

$

(7,454

)

(1)

We define Adjusted EBITDA as net income (loss) adjusted for interest and other expense, net, provision for income taxes, depreciation and amortization, and
stock-based compensation expense. See Adjusted EBITDA below for more information and for a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable financial measure calculated and presented in accordance with
US generally accepted accounting principles, or GAAP.

(2)

Free cash flow is defined as net cash provided by (used in) operating activities less capital expenditures. See Free Cash Flow below for more information
and for a reconciliation of Free Cash Flow to net cash provided by (used in) operating activities, the most directly comparable financial measure calculated and presented in accordance with GAAP.

Gross Profit and Gross Margin. Gross profit and gross margin have been and will continue to be affected by a variety of factors, including the
average sales price of our products, the mix of solutions sold, the mix of revenue between subscriptions and support and professional services, and our level of investment in operating infrastructure. Our gross profit and gross margin for the three
months ended August 31, 2013 was $10.8 million, or 60.1% compared to $17.2 million, or 75.3% for the three months ended August 31, 2012, and our gross profit and gross margin for the six months ended August 31, 2013 was $19.8 million,
or 59.0% compared to $27.0 million, or 70.4% for the six months ended August 31, 2012. We expect gross profit and gross margin to decline for fiscal 2014 compared to fiscal 2013 as we continue to invest in the enablement of partners to deploy
our solutions.

Gross margin on subscriptions and support revenue was 80.3% and gross margin on professional services revenue was 2.0% for the three
months ended August 31, 2013. Gross margin on subscriptions and support revenue was 79.9% and gross margin on professional services revenue was (8.3)% for the six months ended August 31, 2013. Gross margin on subscriptions and support
revenue was 82.1% and gross margin on professional services revenue was 68.8% for the three months ended August 31, 2012. Gross margin on subscriptions and support revenue was 80.7% and gross margin on professional services revenue was 58.0%
for the six months ended August 31, 2012. An increase in the proportion of our total revenue generated by sales of subscriptions and support for our on-demand software applications would increase our overall margins, due to the higher margins
on subscriptions and support compared to professional services. Our gross margin may also fluctuate due to the timing of revenue recognition for our on-demand software solutions and services, since our cost of revenue is recognized as incurred
whereas revenue on certain arrangements with customers is recognized over the contractual term. Additionally, while we invest in the growth of our deployment service capabilities through partner enablement, our professional services revenues and
margins may decrease.

Adjusted EBITDA. Adjusted EBITDA is defined as net income (loss) adjusted for interest and other expense, net,
provision for income taxes, depreciation and amortization, and stock-based compensation expense. Management believes that the use of Adjusted EBITDA provides consistency and comparability with our past financial performance, facilitates period to
period comparisons of operations, and also facilitates comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their reported GAAP results.

Management believes that it is useful to exclude certain non-cash charges, such as depreciation and amortization
and stock-based compensation, and non-core operational charges, such as other expense, net and acquisition-related expenses from Adjusted EBITDA because (1) the amount of such expenses in any specific period may not directly correlate to the
underlying performance of our business operations and (2) such expenses can vary significantly between periods as a result of the timing of new stock-based awards, acquisitions or restructurings, as the case may be.

For the three months ended August 31, 2013, Adjusted EBITDA was $(2.8) million compared to $5.6 million for the three months ended August 31, 2012
and for the six months ended August 31, 2013, Adjusted EBITDA was $(7.0) million compared to $4.3 million for the six months ended August 31, 2012. The fluctuation in Adjusted EBITDA resulted primarily from our continued investment in
research and development and sales and marketing, fluctuations in revenue as described in Results of Operations section, and executing our strategy to grow deployment service capabilities through partner enablement.

The following table presents a reconciliation of Adjusted EBITDA to net income for each of the periods indicated:

Three Months EndedAugust 31,

Six Months EndedAugust 31,

2013

2012

2013

2012

(In thousands)

Reconciliation of Adjusted EBITDA

Net income (loss)

$

(5,923

)

$

4,566

$

(11,317

)

$

2,188

Interest and other expense (income), net

(31

)

169

(82

)

264

Provision for income taxes

35

32

74

75

Depreciation and amortization

579

386

983

795

Acquisition-related expenses

791



791



Stock-based compensation

1,718

482

2,563

961

Adjusted EBITDA

$

(2,831

)

$

5,635

$

(6,988

)

$

4,283

Free Cash Flow. Free cash flow is defined as net cash provided by (used in) operating activities less capital
expenditures. Capital expenditures consist of purchases of property, equipment and software. The following table details our calculation (and reconciliation to net cash provided by (used in) operating activities) of free cash flow. Free cash flow is
a key measure used in our internal operating reports and allows us to manage the cash available to fund our debt obligations and potential strategic initiatives. Management believes that free cash flow is useful to investors as a supplemental
measure to evaluate our business over time. Further, the use of free cash flow provides consistency and comparability with our past financial performance, facilitates period to period comparisons of operations, and also facilitates comparisons with
other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.

We have historically made significant
investments in product development and in selling and marketing our solutions, resulting in net use of cash in operating activities since inception. Our free cash flow was $(4.1) million for the three months ended August 31, 2013, compared to
$(6.0) million for the three months ended August 31, 2012, and our free cash flow was $(7.5) million for the six months ended August 31, 2013, compared to $(7.5) million for the six months ended August 31, 2012. The decrease in free
cash flow was due primarily to increased investment in research and development, sales and marketing and deployment capacity. This is consistent with our strategy to expand our product offerings and customer base to help drive future revenue growth.

Three Months Ended August 31,

Six Months Ended August 31,

2013

2012

2013

2012

(In thousands)

Free Cash Flow Data:

Net cash used in operating activities

$

(4,087

)

$

(5,584

)

$

(7,383

)

$

(6,407

)

Capital expenditures

(58

)

(393

)

(97

)

(1,047

)

Free cash flow

$

(4,145

)

$

(5,977

)

$

(7,480

)

$

(7,454

)

We expect to continue to experience negative free cash flow for fiscal 2014 as we continue to invest in the development and
implementation of new solutions and software applications, expand our sales and marketing resources in order to further penetrate our market both in the United States and internationally, and invest in growing our deployment service capabilities.

Total cost of revenue consists of
costs related to third-party hosting of our equipment and delivery of our software solutions, software license fees, salaries, benefits and other personnel-related expenses included in our operations, professional services, and support departments,
as well as allocated facilities, information technology and supporting overhead costs. The cost associated with providing professional services is significantly higher as a percentage of revenue than the cost associated with delivering our on-demand
software applications due to the labor intensive nature of providing professional services. We expect the absolute cost of revenue to increase as we continue to invest in our business, but at a lower rate than that of our total revenue on an annual
basis.

Operating Expenses

Operating expenses
consist of research and development, sales and marketing, general and administrative, and acquisition-related expenses.

Research and Development

Research and development expense consists of salaries, benefits and other personnel-related expenses, software development tools, as well as allocated
facilities, information technology and supporting overhead costs. We expect to continue to invest in research and development to enhance and expand our existing solutions and develop new solutions and tools for improved deployment and customer
support and, consequently, we expect research and development expense to increase in absolute dollars in future periods.

Sales and Marketing

Sales and marketing expense consists of salaries, benefits and other personnel-related expenses, including sales commissions, advertising and marketing
materials, trade shows and other marketing events, travel and entertainment expenses, as well as an allocation of facilities, information technology and supporting overhead expenses. We intend to continue to invest in sales and marketing to pursue
new customers and expand relationships with existing customers. Accordingly, we expect sales and marketing expense to increase in absolute dollars in future periods.

General and Administrative

General and administrative
expense consists of salaries, benefits and other personnel-related expenses for our finance, accounting, legal, human resources, facilities and information technology employees; third-party professional fees; communication expenses; allocated
facilities expenses; and other administrative expenses. We expect that the costs of being a public company, including the costs of compliance with the Sarbanes-Oxley Act of 2002 and other regulations governing public companies, increased directors
and officers insurance, and professional and other services, will increase our general and administrative expense in absolute dollars in future periods.

Acquisition-related expense

Acquisition related expense
consists of third-party accounting and legal service fees, salaries expenses, travel expenses and other personnel-related expenses incurred solely to prepare for and execute an acquisition.

Interest and Other Income (Expense), Net

Interest
and other income (expense), net, consists primarily of interest income on our cash and cash equivalents, and investments, interest expense on our credit facilities, notes payable and capital leases, financing fees, and foreign exchange currency
transaction and translation gains and losses.

Provision for Income Taxes

We are subject to income tax in the United States as well as other jurisdictions or countries in which we conduct business. Earnings from our non-U.S.
activities are subject to local country income tax. Our effective tax rates differ from the statutory rate due primarily to valuation allowances on our deferred taxes, state taxes, foreign taxes, research and development tax credits and tax
contingencies.

The table presents gross margin as a percentage of each component of revenue.

The table below sets forth the
functional classification of stock-based compensation expense included in cost of revenue for the periods presented:

Three Months EndedAugust 31,

Change

Six Months EndedAugust 31,

Change

2013

2012

$

%

2013

2012

$

%

(In thousands)

(In thousands)

Subscriptions and support

$

82

$

40

$

42

105.0

%

$

145

$

74

$

71

95.9

%

Professional services

415

102

313

306.9

584

189

395

209.0

$

497

$

142

$

355

250.0

%

$

729

$

263

$

466

177.2

%

Total revenue for the three months and six months ended August 31, 2013 was $18.0 million and $33.6 million.
Subscriptions and support revenue and professional services revenue comprised 74.6% and 25.4% of total revenue, for the three months ended August 31, 2013. Subscriptions and support revenue and professional services revenue comprised 76.5% and
23.5% of total revenue, for the six months ended August 31, 2013.

Total revenue for the three months ended August 31, 2013 was $18.0
million compared to $22.9 million for the three months ended August 31, 2012. Total revenue for the three months and six months ended August 31, 2012 included $4.5 million of revenue accelerated from future periods associated with a
contract amendment, which would have been recognized in the remainder of fiscal 2013 through fiscal 2015, absent the amendment.

Subscriptions and support revenue for the three months ended August 31, 2013 was $13.4 million compared to $11.1 million for the three months
ended August 31, 2012, and $25.7 million for the six months ended August 31, 2013 compared to $20.9 million for the six months ended August 31, 2012. Subscription and support revenue for the three and six months ended August 31,
2012 included $0.7 million of revenue accelerated from future periods associated with a contract amendment, which would have been recognized in the remainder of fiscal 2013 through fiscal 2015, absent the amendment.

Professional services revenue for the three months ended August 31, 2013 was $4.6 million compared to $11.8 million for the three months
ended August 31, 2012, and $7.9 million for the six months ended August 31, 2013 compared to $17.4 million for the six months ended August 31, 2012. Professional services revenue for the three months ended August 31, 2012 included
$3.8 million of revenue accelerated from future periods associated with a contract amendment, which would have been recognized in the remainder of fiscal 2013 through fiscal 2015, absent the amendment.

Total revenue for the three months ended August 31, 2013 was $18.0 million compared to $22.9 million for the three months ended August 31,
2012. The decrease was due primarily to the $4.5 million of revenue associated with a contract amendment in the three months ended August 31, 2012 that was accelerated from future periods. Apart from the impact of the aforementioned revenue
acceleration, there was $2.5 million of sales to new customers, offset by a $2.9 million decrease in revenue from existing customers for the three months ended August 31, 2013. Subscriptions and support revenue from existing customers increased $1.7
million; professional services revenue decreased $4.6 million due primarily to the impact of the aforementioned contract amendment, timing of deployments and revenue recognition. Revenue for the three months ended August 31, 2013 included $0.2
million of subscriptions and support revenue and $0.8 million of professional services revenue attributable to the acquisition of ICON. The increase in subscriptions and support revenue and decrease in professional services revenue is in line with
our strategy to maintain focus as a cloud-based software products company and enabling partners to deploy E2open solutions.

For the three months ended August 31, 2013, we had no customer that accounted for more than
10% of revenue. For the three months ended August 31, 2012, we had two customers, RIM and Vodafone, that each accounted for more than 10% of revenue. For the three months ended August 31, 2013, revenue attributable to customers
headquartered in the United States accounted for 79.2% of total revenue. For the three months ended August 31, 2012, revenue attributable to customers headquartered in Canada and the United States each accounted for more than 10% of total
revenue.

Total revenue for the six months ended August 31, 2013 was $33.6 million compared to $38.4 million for the six months ended
August 31, 2012. The decrease was due primarily to the $4.5 million of revenue associated with a contract amendment in the six months ended August 31, 2012 that was accelerated from future periods. Apart from the impact of the aforementioned revenue
acceleration, there was $4.0 million of sales to new customers, offset by a $4.3 million decrease in revenue from existing customers for the three months ended August 31, 2013. Subscriptions and support revenue from existing customers increased
$3.4 million; professional services revenue decreased $7.7 million due primarily to the impact of the aforementioned contract amendment, timing of deployments and revenue recognition. Revenue for the six months ended August 31, 2013 included
$0.2 million of subscriptions and support revenue and $0.8 million of professional services revenue attributable to the acquisition of ICON. This increase in subscriptions and support revenue and decrease in professional services revenue is in
line with our strategy to maintain focus as a cloud-based software products company and enabling partners to deploy E2open solutions.

For
the six months ended August 31, 2013, we had no customer that accounted for more than 10% of revenue. For the six months ended August 31, 2012, we had two customers, RIM and Vodafone, that each accounted for more than 10% of revenue. For
the six months ended August 31, 2013, revenue attributable to customers headquartered in the United States accounted for 77.2% of total revenue. For the six months ended August 31, 2012, revenue attributable to customers headquartered in
Canada and the United States each accounted for more than 10% of total revenue.

Total cost of revenue fluctuates period-to-period
depending on the growth of our professional services business and any associated increased costs relating to the delivery of our on-demand software solutions and professional services, as well as the timing of significant expenditures.

Total cost of revenue increased $1.5 million, or 27.0%, for the three months ended August 31, 2013 compared to the three months ended
August 31, 2012. The increase in total cost of revenue was attributable primarily to a $1.0 million increase in employee-related expenses driven by increased headcount, an increase of $0.3 million in fees paid to third-party contractors, and a
$0.3 million increase in software and hardware maintenance costs.

Total cost of revenue increased $2.4 million, or 21.3%, for the six
months ended August 31, 2013 compared to the six months ended August 31, 2012. The increase in total cost of revenue was attributable primarily to a $2.3 million increase in employee-related expenses driven by increased headcount.

Gross margin is impacted by the timing of when we record our revenue and costs related to arrangements with customers. We recognize revenue on
certain arrangements over the contractual term or only upon completion of work performed, whereas we recognize costs as incurred. As such, this may cause our gross margins to fluctuate between periods.

Total gross profit decreased $6.4 million, or 37.2%, for the three months ended August 31, 2013 compared to the three months ended
August 31, 2012, and gross margin declined from 75.3% to 60.1%. The decrease in gross profit and margin reflects the impact of our strategy to accelerate the investment in the enablement of partners to deploy our solutions for fiscal 2014.

Total gross profit decreased $7.2 million, or 26.6%, for the six months ended August 31, 2013 compared to the six months ended
August 31, 2012, and gross margin declined from 70.4% to 59.0%. The decrease in gross profit and margin reflects the impact of our strategy to accelerate the investment in the enablement of partners to deploy our solutions for fiscal 2014.

The table below sets forth the functional classification of stock-based compensation expense for the periods presented:

Three Months EndedAugust 31,

Change

Six Months EndedAugust 31,

Change

2013

2012

$

%

2013

2012

$

%

(In thousands)

(In thousands)

Research and development

$

148

$

25

$

123

492.0

%

$

216

$

78

$

138

176.9

%

Sales and marketing

617

137

480

350.4

907

282

625

221.6

General and administrative

456

178

278

156.2

711

338

373

110.4

$

1,221

$

340

$

881

259.1

%

$

1,834

$

698

$

1,136

162.8

%

Research and Development

Research and development expense increased $1.0 million, or 27.4%, for the three months ended August 31, 2013 compared to the three months
ended August 31, 2012. The increase was attributable to an increase in employee-related costs. As a percentage of revenue, research and development expense was 25.2% for the three months ended August 31, 2013 and 15.5% for the three months
ended August 31, 2012.

Research and development expense increased $1.0 million, or 12.5%, for the six months ended August 31,
2013 compared to the six months ended August 31, 2012. The increase was attributable to an increase of $0.8 million in employee-related costs. As a percentage of revenue, research and development expense was 25.6% for the six months ended
August 31, 2013 and 19.9% for the six months ended August 31, 2012.

Sales and Marketing

Sales and marketing expense increased $2.1 million, or 32.0%, for the three months ended August 31, 2013 compared to the three months
ended August 31, 2012. The increase was attributable to an increase in employee-related costs as we continue to expand our field sales organization globally. Average headcount in sales and marketing increased from 81 for the three months ended
August 31, 2012 to 101 for the three months ended August 31, 2013.

Sales and marketing expense increased $3.9 million, or
30.3%, for the six months ended August 31, 2013 compared to the six months ended August 31, 2012. The increase was attributable to an increase in employee-related costs as we continue to expand our field sales organization globally.
Average headcount in sales and marketing increased from 76 for the six months ended August 31, 2012 to 92 for the six months ended August 31, 2013.

Total sales and marketing headcount increased by 30.9% from 81 as of August 31, 2012 to 106 as of August 31, 2013. As a percentage
of revenue, sales and marketing expense increased from 29.0% and 33.3% for the three and six months ended August 31, 2012 to 48.6% and 49.5% for the three and six months ended August 31, 2013 reflecting our investment in sales and
marketing to drive revenue growth.

General and administrative expense increased $0.4 million, or 16.0%, for the three months ended August 31, 2013 compared to the three
months ended August 31, 2012. The increase was driven by a $0.3 million increase in employee-related expense resulting from increased headcount to support the growth of the business and the infrastructure required to support a public company.
As a percentage of revenue, general and administrative expense was 9.9% for the three months ended August 31, 2012 and 14.7% for the three months ended August 31, 2013.

General and administrative expense increased $1.0 million, or 25.4%, for the six months ended August 31, 2013 compared to the six months
ended August 31, 2012. The increase was driven primarily by a $0.7 million increase in employee-related expense resulting from increased headcount to support the growth of the business and the infrastructure required to support a public
company, $0.2 million increase in facilities expense and $0.1 million increase in third-party professional fees. As a percentage of revenue, general and administrative expense was 10.6% for the six months ended August 31, 2012 and 15.1% for the
six months ended August 31, 2013.

Acquisition- related Expense

Acquisition-related expense was $0.8 million for the three months and six months ended August 31, 2013, and there was no
acquisition-related expense for the three months and six months ended August 31, 2012. This expense comprised third-party accounting and legal service fees, personnel-related expenses, travel expenses and other expenses incurred solely to
prepare for and execute the acquisition of ICON. As a percentage of revenue, acquisition related expense was 4.4% for the three months ended August 31, 2013 and 2.4% for the six months ended August 31, 2013.

As of August 31, 2013, we had total cash, cash equivalents, short-term and long-term investments of $21.6
million, including cash and cash equivalents of $12.9 million, and short-term investments in available for sale debt securities of $3.7 million. As of August 31, 2013, we also had $4.9 million of long-term investments in available for sale
debt securities.

On July 31, 2012, we received proceeds from our initial public offering of $52.3 million, net of underwriting
discounts and commissions, but before deducting offering expenses.

Operating Cash Flow

Our cash flow from operating activities is significantly influenced by the amount and timing of customer payments and the amount of cash we
invest in personnel and infrastructure to support the anticipated future growth of our business. Net cash used in operating activities has historically resulted from losses from operations and changes in working capital.

Net cash used in operating activities was $7.4 million for the six months ended August 31, 2013. The timing of our billings and
collections relating to our sales and the timing of the payment of our liabilities have a significant impact on our cash flows. The use of cash in operating activities reflects our $(11.3) million net loss adjusted by non-cash stock-based
compensation of $2.6 million, depreciation and amortization of $1.0 million and other non-cash charges of $0.1 million. This was offset by $0.2 million provided by the net change in our operating assets and liabilities. The net change in our
operating assets and liabilities resulted primarily from a decrease in accounts receivable of $10.6 million due to the timing of collections from customers, increase in accounts payable and accruals of $0.8 million due to timing of payments to our
suppliers, and an increase in other noncurrent liabilities due to deferred rent of $0.5 million. This was offset by a decrease in deferred revenue of $11.0 million as a consequence of the recognition of revenue for the six months ended
August 31, 2013 associated with cash collected in previous periods and an increase in prepayments and other current assets of $0.7 million associated with prepayment for software and hardware maintenance expense and other receivables.

Net cash used in operating activities was $6.4 million for the six months ended August 31, 2012. The timing of our billings and
collections relating to our sales and the timing of the payment of our liabilities have a significant impact on our cash flows. The use of cash in operating activities reflects our $2.2 million net income adjusted by non-cash stock-based
compensation of $1.0 million and depreciation and amortization of $0.8 million. Additionally, we used $10.4 million from the net change in our operating assets and liabilities. The net change in our operating assets and liabilities resulted
primarily from a decrease in deferred revenue of $9.6 million as a consequence of the recognition of revenue for the six months ended August 31, 2012 associated with cash collected in previous periods, an increase in prepayments of $0.5 million
associated with software and hardware maintenance expense and a decrease in accounts payable of $0.5 million due to timing of payments to our suppliers, offset by a decrease in accounts receivable of $0.3 million due to the timing of collections
from customers.

Investing Cash Flow

Historically, our primary investing activities have consisted of capital expenditures associated with expanding our cloud-based, on-demand
software solutions infrastructure and growing our workforce. We invested a portion of the proceeds from our initial public offering in available for sale securities.

Net cash provided by investing activities for the six months ended August 31, 2013 was $7.0 million, which was comprised primarily
of $28.9 million in proceeds from the sale and maturities of investments in available-for-sale securities, offset by $11.5 million net payment for acquisition of ICON and $10.4 million for the purchase of investments in
available-for-sale securities.

Net cash used in investing activities for the six months ended August 31, 2012 was $15.4 million,
which was comprised primarily of $14.3 million purchase of investments in available for sale securities, and $1.0 million of capital expenditures.

Net cash used in financing activities for the six months ended August 31, 2013 was $7.0 million, which was comprised of $7.1 million
payment of debt assumed from ICON, net payments of $0.9 million on our notes payable and capital lease obligation and $0.2 million of net payments under our credit facility, offset by $1.2 million in proceeds received from the
exercise of stock options.

Net cash provided by financing activities for the six months ended August 31, 2012 was $41.0 million,
which was comprised primarily of $52.3 million in proceeds from our initial public offering after deducting broker discounts and commissions and $0.7 million in costs paid in connection with our initial public offering. We also made net payments of
$9.7 million under our credit facility and $1.7 million on our term loan. For the six months ended August 31, 2012, we received $0.7 million from the issuance of Series BB preferred stock upon the exercise of warrants and $0.2 million in
proceeds received from the exercise of stock options during the period.

Adequacy of Capital Resources

We believe our existing cash, cash equivalents and investment balances, together with anticipated cash flow from operations, will be sufficient
to meet our working capital and operating resource requirements for at least the next twelve months.

Our Indebtedness

We maintained a credit facility with Bridge Bank, National Association (Bridge Bank), which has provided us revolving lines of credit and term
loans. The total borrowing limit under the credit facility was $26.8 million, subject to borrowing base limitations. In August 2012, we paid in full all of our outstanding borrowings under the lines of credit and the term loan. The revolving
line of credit expired effective August 14, 2012 and the term loan facility was cancelled effective September 10, 2012. On October 7, 2013 the Company entered into a Business Financing Agreement for a revolving loan facility with a
borrowing capacity of up to $20,000,000, with availability to be subject to a borrowing formula, and secured by the Companys accounts receivable and contracted backlog. The revolving loan facility bears interest at a per annum rate equal to
the Wall Street Journal prime rate minus 0.25%, with a floor for the prime rate of 3.25%. The revolving loan facility is a general obligation of the Company secured by the Companys tangible and intangible assets, as well as a
negative pledge whereby the Company agrees not to give any creditor a security interest on the Companys intellectual property.

Our
wholly-owned subsidiary in Germany maintains credit facilities with three local banks used primarily to fund working capital. The total amount available under the credit facilities is approximately $1,985,000 (1,500,000). As of August 31,
2013, the total outstanding balance borrowed under the credit facilities is approximately $1,173,000, and it is included in accounts payable and accrued liabilities in the balance sheets.

Contractual Obligations, Commitments and Contingencies

We generally do not enter into long-term minimum purchase commitments. Our principal commitments, in addition to those related to our line of
credit discussed above, consist of obligations under capital leases for equipment and furniture and operating leases for computer equipment and office space. The following table summarizes our outstanding contractual obligations:

As of August 31, 2013

Payments Due by Period

Total

Less Than1 Year

1-3Years

3-5Years

(In thousands)

Notes payable (1)

$

473

$

237

$

236

$



Capital lease obligations (1)

3,596

881

2,715



Operating lease obligations (2)

8,649

1,246

3,850

3,553

Acquisition payable to seller (4)

5,309



5,309



Tax contingencies (3)









Total contractual obligations

$

18,027

$

2,364

$

12,110

$

3,553

(1)

In fiscal 2013 and the six months ended August 31, 2013, we financed the purchase of certain software licenses and related support and maintenance, and payments
of insurance premiums with notes payable and capital leases. The term of the notes and capital leases range from nine months to three years, and bear interest ranging from 3.03% to 13.13%.

(2)

We lease our primary office space under noncancelable operating leases with various expiration dates through 2018.

(3)

As of February 28, 2013, we had gross unrecognized tax benefits of $4.5 million and an additional $0.1 million for gross interest and penalties
classified as other noncurrent liabilities in the consolidated balance sheet. At this time, we are unable to make a reasonably reliable estimate of the timing of payments in individual years due to uncertainties in the timing of settlement for
potential tax audit outcomes. As a result, such amounts are not included in the above contractual obligations table.

(4)

In accordance with the share purchase agreement for the acquisition of ICON, we are contractually obliged to place in escrow $5.3 million payable to ICONs
former shareholders. The amount in escrow will be released to ICONs former shareholders on July 31, 2014, the escrow expiration date, net of claims arising during the escrow period.

During the six months ended August 31, 2013, we did not have any relationships with unconsolidated entities or financial partnerships,
such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually limited purposes.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States
(GAAP). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenue and expenses during the reported period. Generally, we base our estimates on historical experience and on various other assumptions in accordance with GAAP that we believe to be reasonable under the
circumstances. Accordingly, actual results may differ from these estimates under other assumptions or conditions.

Critical accounting
policies and estimates are those that we consider the most important to the portrayal of our financial condition and results of operations because they require our most difficult, subjective or complex judgments, often as a result of the need to
make estimates about the effect of matters that are inherently uncertain. We have identified below our critical accounting policies and estimates that we believe require the greatest amount of judgment. Our critical accounting policies and
estimates include those related to:



revenue recognition;



income taxes;



stock-based compensation;



impairment of goodwill and other long-lived assets; and



valuation of acquired intangibles;

We previously did not consider the valuation of acquired
intangibles and impairment of goodwill and other long-lived assets as critical estimates because these were historically not material to the financial statements in the prior years. Except for the valuation of acquired intangibles and impairment of
goodwill and other long-lived assets, there have been no material changes to the Companys significant accounting policies as compared to the significant accounting policies disclosed in the Companys audited consolidated financial
statements for the fiscal year ended February 28, 2013 included in the Companys Annual Report on Form 10-K dated April 30, 2013 as filed with the Securities and Exchange Commission.

Market risk represents the
risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is a result primarily of fluctuations in interest rates and foreign currency exchange rates. We do not hold or
issue financial instruments for trading purposes.

Interest Rate Risk

We had cash, cash equivalents and investments in available for sale instruments of $21.6 million as of August 31, 2013 and $47.2 million
at February 28, 2013.

Our cash and cash equivalents and investments consist of cash, money market funds and fixed income
investments. Our fixed income portfolio is primarily invested in corporate bonds and commercial paper. We use a professional investment management firm to manage a large portion of our invested cash. Because the majority of our portfolio consists of
cash and cash equivalents, which have a relatively short maturity, our portfolios fair value is relatively insensitive to interest rate changes. However, our fixed income investments carry a degree of interest rate risk. Fixed income
investments may have their fair market value adversely impacted by a rise in interest rates. We believe a hypothetical 10% increase in interest rates as of August 31, 2013 would have an immaterial impact on our investment portfolio.

Foreign Currency Exchange Risk

Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, particularly the
exchange rates for the Euro, the Malaysian Ringgit and the British Pound. For the six months ended August 31, 2013 and the year ended February 28, 2013, we sought to hedge the risks associated with exchange rate fluctuations through entry
into forward exchange contracts. The tables below present the notional amounts (at the contract exchange rates), the weighted-average contractual foreign currency exchange rates, and the estimated fair value of our contracts outstanding as of
August 31, 2013 and February 28, 2013.

As of August 31, 2013

As of February 28, 2013

Notional Sell(Buy)

AverageContractRate

Estimated FairValue

Notional Sell(Buy)

AverageContractRate

Estimated FairValue

(Dollars in thousands except average contract rates)

Foreign currency forward exchange contracts:

Euro

$

5,935

1.3

$

(63

)

$

7,322

1.3

$

(146

)

Malaysian Ringgit

(5,706

)

3.1

(50

)

(2,255

)

3.1

(8

)

British Pound

(973

)

1.5

(57

)







Total

$

(744

)

$

(170

)

$

5,067

$

(154

)

We entered into the foreign exchange contracts with two counterparties. Typically, we have the right of offset
for gains earned and losses incurred under contracts with the same counterparty, and we therefore record contracts with the same counterparty on a net basis on our balance sheet.

The following table presents a sensitivity analysis of our foreign forward exchange contract portfolio using a statistical model to estimate
the potential gain or loss in fair value that could arise from hypothetical appreciation or depreciation of foreign currency.

As our international operations continue to grow, we may choose to utilize more foreign currency forward and
option contracts to manage currency exposures.

We do not use derivative financial instruments for speculative or trading purposes;
however, this does not mean that we may not adopt specific hedging strategies in the future.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls
and procedures as of August 31, 2013. The term disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that
information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SECs rules and forms. Disclosure
controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to
the companys management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Based on the evaluation of our disclosure controls and procedures as of
August 31, 2013, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by
Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial
reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, believes that our disclosure controls and procedures and
internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and
procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control
system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems,
no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that
breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of
controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may
become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and
not be detected.

Our operations and financial results are subject to various risks and
uncertainties including those described below. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, also may become
important factors that affect us. If any of the following risks or others not specified below materialize, our business, financial condition, results of operations and prospects could be materially adversely affected. In that case, the trading price
of our common stock could decline.

Risks Related to Our Business and Industry

We have incurred operating losses in the past and may incur operating losses in the future.

We began our operations in 2000. Throughout most of our history, we have experienced net losses and negative cash flows from operations. As of
August 31, 2013 and February 28, 2013, we had an accumulated deficit of $352.5 million and $341.2 million. We expect our operating expenses to increase in the future as we expand our operations. Furthermore, as a public company, we
incur legal, accounting and other expenses that we did not incur as a private company. If our revenue does not grow to offset these increased expenses, we will not be profitable. We cannot assure you that we will be able to achieve or maintain
profitability. You should not consider recent revenue growth as indicative of our future performance.

If we are unable to attract new customers or
sell additional products to our existing customers, our revenue growth and profitability will be adversely affected.

To increase
our revenue and achieve and maintain profitability, we must regularly add new customers or sell additional solutions to our existing customers, which we plan to do. Numerous factors, however, may impede our ability to add new customers and sell
additional solutions to our existing customers, including our inability to convert companies that have been referred to us by our existing network into paying customers, failure to attract and effectively train new sales and marketing personnel,
failure to retain and motivate our current sales and marketing personnel, failure to develop relationships with resellers or failure to ensure the effectiveness of our marketing programs. In addition, if prospective customers do not perceive our
solutions to be of sufficiently high value and quality, we will not be able to attract the number and types of new customers that we are seeking.

If we are unable to attract and enable third-party service providers, our revenue and margin growth will be adversely affected.

To enable anticipated growth of product subscriptions, we intend to utilize partners to provide integration and deployment services. This
strategy depends upon successful marketing to and recruitment of partners. It also assumes successful training and transfer of the knowledge and skills required to deploy system integration and software functionality. We cannot assure the
recruitment of sufficient partners to meet anticipated demand or that those partners who are recruited can be made effective substitutes for internal professional services resources.

We derive a significant portion of our revenue from a relatively small number of customers, and our growth depends on our ability to retain existing
customers and add new customers.

We derive a significant percentage of our revenue from a relatively small number of customers,
and the loss of any one or more of those customers for any reason, including without limitation, early termination of our contract with them could decrease our revenue and harm our current and future results of operations. For example, RIM may
terminate its agreement with us upon 90 days written notice. For the six months ended August 31, 2013, our top ten customers accounted for 58.4% of our total revenue. Although our largest customers may vary from period to period, we anticipate
that we will continue to depend on revenue from a relatively small number of customers.

We encounter long sales cycles, particularly with our larger customers, and seasonality in sales, which
could have an adverse effect on the amount, timing and predictability of our revenue.

Our products have lengthy sales cycles,
which typically extend from four to 12 months and may in some instances take longer than one year. Potential and existing customers, particularly larger enterprises, often commit significant resources to an evaluation of available solutions and
services and require us to expend substantial time and resources in connection with our sales efforts. The length of our sales cycles also varies depending on the type of customer to which we are selling, the product being sold and customer
requirements. We may incur substantial sales and marketing expenses and expend significant management effort during this time, regardless of whether we make a sale. Many of the risks relating to sales processes are beyond our control, including:



Our customers budgetary and scheduling constraints;



The timing of our customers budget cycles and approval processes;



Our customers willingness to augment or replace their currently deployed software products; and



General economic conditions.

As a result of the lengthy and uncertain sales cycles of our
products and services, it is difficult for us to predict when customers may purchase products or services from us, thereby affecting when we can recognize the associated revenue, and our results of operations may vary significantly and may be
adversely affected. The length of our sales cycle makes us susceptible to having pending transactions delayed or terminated by our customers if they decide to delay or withdraw funding for information technology, projects. Our customers may decide
to delay or withdraw funding for various reasons, including global economic cycles and capital market fluctuations.

In addition, we may
experience seasonality in the sales of our solutions. For instance, historically, the agreements we have signed in our fiscal first quarter have had an aggregate value less than that of the agreements signed in our preceding fiscal fourth quarter.
Seasonal variations in our sales may lead to significant fluctuations in our cash flows and deferred revenue on a quarterly basis. If we fail to sign a significant customer agreement in any particular quarter, then our results of operations for such
quarter and for subsequent quarters may be below the expectations of securities analysts or investors, which may result in a decline in our stock price.

Our quarterly results of operations may fluctuate. As a result, we may fail to meet or exceed the expectations of investors or securities analysts which
could cause our stock price to decline.

Our quarterly revenue and results of operations may fluctuate as a result of a variety of
factors, many of which are outside of our control. If our quarterly revenue or results of operations fall below the expectations of investors or securities analysts, the price of our common stock could decline substantially. Fluctuations in our
results of operations may be due to a number of factors, including, but not limited to, those listed below:



Demand for and market acceptance of our products;



Our ability to retain and increase sales to customers and attract new customers;



The timing of product deployment which determines when we can recognize the associated revenue;



The timing and success of introductions of new solutions or upgrades by us or our competitors;

Competition, including entry into the industry by new competitors and new offerings by existing competitors;



The impact of seasonality on our business;



The amount and timing of expenditures related to expanding our operations, research and development or introducing new solutions; and



Changes in the payment terms for our solutions.

Due to the foregoing factors, and the other
risks discussed in this Quarterly Report on Form 10-Q, you should not rely on quarter-to-quarter comparisons of our results of operations as an indication of our future performance.

We operate in an emerging and evolving market, which may make it difficult to evaluate our business and future prospects. If this market does not
develop or develops more slowly than we expect, our revenue may decline or fail to grow, and we may incur additional operating losses.

The market for trading network solutions, including our integrated platform, is in an early stage of development, and it is uncertain how
rapidly this market will develop, and even if it does develop, whether our software and solutions will achieve and sustain high levels of demand and market acceptance.

Some companies may be reluctant or unwilling to use our solutions for a number of reasons, including existing investments in demand and supply
network management technology. For example, supply chain management functions traditionally have been performed using purchased or licensed hardware and software implemented by each company in the supply chain. Because this traditional approach
often requires significant initial investments to purchase the necessary technology and to establish systems that comply with customers unique requirements, suppliers may be unwilling to abandon their current options for our integrated,
multi-enterprise solution.

Other factors that may limit market acceptance of our solutions include:



Our ability to maintain high levels of customer satisfaction;



Our ability to maintain availability of service across all users of our products;

Concerns about data protection and confidentiality of data stored in the United States, for customers with headquarters outside of the United States.

If companies do not perceive or value the benefits of our solutions, or if companies are unwilling to accept our platform as an alternative to
the traditional approach, the market for our products might not continue to develop or might develop more slowly than we expect, either of which would significantly adversely affect our revenue and growth prospects.

Downturns in general economic and market conditions and reductions in IT spending may reduce demand for our
solutions, which could negatively affect our revenue, results of operations and cash flows.

Our revenue, results of operations and
cash flows depend on the overall demand for our solutions. Concerns about the systemic impact of a potential widespread recession, energy costs, geopolitical issues U.S. federal budget issues and the availability of credit have contributed to
increased market volatility, decreased consumer confidence and diminished growth expectations in the U.S. economy and abroad. This in turn has resulted in reductions in IT spending by some of our customers.

Further worsening, broadening or protracted extension of the economic downturn could have a significant negative impact on our business,
revenue, results of operations and cash flows. Prolonged economic slowdowns may result in customers requiring us to renegotiate existing contracts on less advantageous terms to us than those currently in place or defaulting on payments due on
existing contracts.

Furthermore, during weak economic times, there is an increased risk that one or more of our customers will file for
bankruptcy protection, which may adversely affect our revenue, profitability and results of operations. If a customer files for bankruptcy, we may be required to forego collection of pre-petition amounts owed and to repay amounts remitted to us
during the 90-day preference period preceding the filing, which may be significant due to extended payment terms for software contract fees, and significant billings for professional services on large projects. We also face risk from international
customers that file for bankruptcy protection in foreign jurisdictions, in that the outcome of the application of foreign bankruptcy laws may be more difficult to predict. In addition, we may determine that the cost of pursuing any claim may
outweigh the recovery potential of such claim.

If we are unable to develop new products and services, sell our solutions into new markets or
further penetrate our existing markets, our revenue will not grow as expected.

Our ability to attract new customers and increase
revenue from existing customers will depend in large part on our ability to enhance and improve our solutions, to introduce new products and services in a timely manner, to sell into new markets and to further penetrate our existing markets. The
success of any enhancement or new product or service depends on several factors, including the timely completion, introduction and market acceptance of the enhancement or new product or service. Any new product or service we develop or acquire may
not be introduced in a timely or cost-effective manner and may not achieve the broad market acceptance necessary to generate significant revenue. Any new markets into which we attempt to sell our solutions, including new vertical markets and new
countries or regions, may not be receptive. If we are unable to successfully develop or acquire new products or services, enhance our existing products or services to meet customer requirements, sell products and services into new markets or sell
our products and services to additional customers in our existing markets, our revenue will not grow as expected. Moreover, we are frequently required to enhance and update our products and services as a result of changing standards and
technological developments, which makes it difficult to recover the cost of development and forces us to continually qualify new products with our customers.

If we do not maintain the compatibility of our solutions with third-party applications that our customers use in their business processes, demand for
our solutions could decline.

Our solutions can be used alongside a wide range of other systems, such as enterprise software
systems and business software applications used by our customers in their businesses. If we do not support the continued integration of our solutions with third-party applications, including through the provision of application programming
interfaces that enable data to be transferred readily between our solutions and third-party applications, demand for our solutions could decline, and we could lose sales. We will also be required to make our solutions compatible with new or
additional third-party applications that are introduced into the markets that we serve. We may not be successful in making our solutions compatible with these third-party applications, which could reduce demand for our solutions. In addition,
prospective customers, especially large enterprise customers, may require heavily customized features and functions unique to their business processes. If prospective customers require customized features or functions that we do not offer, then the
market for our solutions will be adversely affected.

The industry in which we compete is characterized by rapid technological change, frequent introductions of new products and
evolving industry standards. Our ability to attract new customers and increase revenue from customers will depend in significant part on our ability to anticipate industry standards and to continue to enhance existing solutions or introduce or
acquire new solutions on a timely basis to keep pace with technological developments. The success of any enhancement or new solution depends on several factors, including the timely completion and market acceptance of the enhancement or new
solution. Any new solution we develop or acquire might not be introduced in a timely or cost-effective manner and might not achieve the broad market acceptance necessary to generate significant revenue. If any of our competitors implements new
technologies before we are able to implement them, those competitors may be able to provide more effective solutions than ours at lower prices. Any delay or failure in the introduction of new or enhanced solutions could adversely affect our
business, results of operations and financial condition.

Our solutions are complex and customers may experience difficulty in implementing or
upgrading our products successfully or otherwise achieving the benefits attributable to our products.

Due to the scope and
complexity of the solutions that we provide, our implementation cycle can be lengthy and unpredictable. Our products may require modification or customization and must integrate with many existing computer systems and software programs of our
customers and their trading partners. This can be time-consuming and expensive for our customers and can result in delays in the implementation and deployment of our products. As a result, some customers have had, and may in the future have,
difficulty implementing our products successfully or otherwise achieving the expected benefits of our products. Delayed or ineffective implementation or upgrades of our software may limit our future sales opportunities, impact revenue, delay
deployment of security patches, result in customer dissatisfaction and harm our reputation.

The markets in which we participate are highly
competitive, and our failure to compete successfully would make it difficult for us to add and retain customers and would reduce or impede the growth of our business.

The markets for supply chain management solutions are increasingly competitive and global. We expect competition to increase in the future both
from existing competitors and new companies that may enter our markets. Increased competition could result in pricing pressure, reduced sales, lower margins or the failure of our solutions to achieve or maintain broad market acceptance. We currently
face, or may face in the future, competition from:



SaaS providers that deliver B2B information systems;



Traditional on-premise software providers; and



Managed service providers that combine traditional on-premise software with professional information technology services.

To remain competitive, we will need to invest continuously in software development, marketing, customer service and support and product
delivery infrastructure. However, we cannot assure you that new or established competitors will not offer solutions that are superior to or lower in price than ours. We may not have sufficient resources to continue the investments in all areas of
software development and marketing needed to maintain our competitive position. In addition, some of our competitors have longer operating histories, greater name recognition, larger customer bases and significantly greater financial, technical,
sales, marketing and other resources than us, which may provide them with an advantage in developing, marketing or servicing new solutions. Increased competition could reduce our market share, revenue and operating margins, increase our operating
costs and otherwise adversely affect our business.

If we are unable to manage our diverse and complex operations, our reputation in the market and our ability
to generate revenue from new or existing customers may be adversely affected.

Because our operations are geographically diverse
and complex, our personnel resources and infrastructure could become strained and our reputation in the market and our ability to successfully implement our business plan may be adversely affected. We have experienced a period of rapid growth in our
headcount and operations. For the six months ended August 31, 2013, our employee headcount grew from 379 to 454. The growth in the size, complexity and diverse nature of our business and the expansion of our product lines and customer base have
placed increased demands on our management and operations, and further growth, if any, may place additional strains on our resources in the future. Our ability to effectively compete and to manage our planned future growth will depend on, among
other things, the following:

If we do not manage the size,
complexity and diverse nature of our business effectively, we could experience delayed software releases and longer response times for assisting our customers with implementation of our products and services, and could lack adequate resources to
support our customers on an ongoing basis, any of which could adversely affect our reputation in the market, our ability to successfully implement our business plan and our ability to generate revenue from new or existing customers.

If we fail to retain our key employees, our business would be harmed and we might not be able to implement our business plan successfully.

Given the complex nature of the technology on which our business is based and the speed with which such technology advances, our future success
is dependent, in large part, upon our ability to attract and retain highly qualified managerial, technical and sales personnel. In particular, Mark E. Woodward, our Chief Executive Officer, is critical to the management of our business and
operations. Competition for talented personnel is intense, and we cannot be certain that we can retain our managerial, technical and sales personnel or that we can attract, assimilate or retain such personnel in the future. Our inability to attract
and retain such personnel could have an adverse effect on our business, results of operations and financial condition.

Our growth is dependent upon
the continued development of our direct sales force.

We believe that our future growth will depend on the continued development of
our direct sales force and their ability to obtain new customers, particularly large enterprise customers, and to manage our existing customer base. Our ability to achieve significant growth in revenue in the future will depend, in large part, on
our success in recruiting, training and retaining a sufficient number of direct sales personnel. New sales personnel require significant training and may, in some cases, take more than a year before becoming productive, if at all. If we are unable
to hire and develop sufficient numbers of productive direct sales personnel, sales of our software and services will suffer and our growth will be impeded.

If we experience significant fluctuations in our rate of anticipated growth and fail to balance our expenses with our revenue forecasts, our results
could be harmed.

Due to our evolving business model and the unpredictability of future general economic and financial market
conditions, we may not be able to accurately forecast our rate of growth. We plan our expense levels and investment on estimates of future revenue and future anticipated rate of growth. We may not be able to adjust our spending quickly enough if the
addition of new subscriptions or the renewal rate for existing subscriptions falls short of our expectations. As a result, we expect that our revenues, operating results and cash flows may fluctuate significantly on a quarterly basis. We believe
that period to period comparisons of our revenues, operating results and cash flows may not be meaningful and should not be relied upon as an indication of future performance.

Interruptions or delays in the services provided by third-party data centers and/or internet service
providers could impair the delivery of our solutions and our business could suffer.

In North America, we host our solutions in
Equinix co-location facilities in Sunnyvale and San Jose, California and a suburb of Chicago, Illinois. Exostar hosts our solutions for the aerospace and defense industry in third-party data centers and with third-party internet service providers
outside of Washington, D.C. All of our solutions reside on hardware owned or leased and operated by us and Exostar in these locations. In China, we host our solutions in a data center in Shanghai operated by Shanghai Telecom. Our operations depend
on the protection of the equipment and information we store in these third-party data centers and which third-party internet service providers transmit against damage or service interruptions that may be caused by fire, flood, severe storm,
earthquake, power loss, telecommunications failures, unauthorized intrusion, computer viruses and disabling devices, natural disasters, war, criminal act, military action, terrorist attack and other similar events beyond our control. A prolonged
service disruption affecting our solutions for any of the foregoing reasons could damage our reputation with current and potential customers, expose us to liability, cause us to lose customers from whom we receive recurring revenue or otherwise
adversely affect our business. We may also incur significant costs for using alternative equipment or taking other actions in preparation for, or in reaction to, events that damage the data centers we use.

Our solutions are accessed by a large number of customers often at the same time. As we continue to expand the number of our customers and
solutions available to our customers, we may not be able to scale our technology to accommodate the increased capacity requirements, which may result in interruptions or delays in service. In addition, the failure of our third-party data centers or
third-party internet service providers to meet our capacity requirements could result in interruptions or delays in access to our solutions or impede our ability to scale our operations. In the event that our data center or third-party internet
service provider arrangements are terminated, or there is a lapse of service, interruption of internet service provider connectivity, or damage to such facilities, we could experience interruptions in access to our solutions as well as delays and
additional expense in arranging new facilities and services.

We may experience service failures or interruptions due to defects in the software,
infrastructure, third-party components or processes that comprise our existing or new solutions, any of which could adversely affect our business.

Our products may contain undetected defects in the software, infrastructure, third-party components or processes that are part of the solutions
we provide. If these defects lead to service failures after introduction of a solution or an upgrade to the solution, we could experience delays or lost revenue during the period required to correct the cause of the defects. We cannot be certain
that defects will not be found in new solutions or upgraded solutions, resulting in loss of, or delay in, market acceptance, which could have an adverse effect on our business, results of operations and financial condition.

Because customers use our solutions for critical business processes, any defect in our solutions, any disruption to our solutions or any error
in execution could cause recurring revenue customers to cancel their contracts with us, prevent potential customers from purchasing our solutions and harm our reputation. Although our contracts with our customers limit our liability to our customers
for these defects, disruptions or errors, we nonetheless could be subject to litigation for actual or alleged losses to our customers businesses, which may require us to spend significant time and money in litigation or arbitration or to pay
significant settlements or damages. We do not currently maintain any warranty reserves. Defending a lawsuit, regardless of its merit, could be costly and divert managements attention and could cause our business to suffer.

The insurers under our existing liability insurance policy could deny coverage of a future claim that results from an error or defect in our
technology or a resulting disruption in our solutions, or our existing liability insurance might not be adequate to cover all of the damages and other costs of such a claim. Moreover, we cannot assure you that our current liability insurance
coverage will continue to be available to us on acceptable terms or at all. The successful assertion against us of one or more large claims that exceeds our insurance coverage, or the occurrence of changes in our liability insurance policy,
including an increase in premiums or imposition of large deductible or co-insurance requirements, could have an adverse effect on our business, financial condition and results of operations. Even if we succeed in litigation with respect to a claim,
we are likely to incur substantial costs and our managements attention will be diverted from our operations.

We may be required to defer recognition of some of our revenue, which may adversely affect our financial
results in any given period.

We may be required to defer recognition of revenue for a significant period of time after entering
into an agreement due to a variety of factors, including whether:



The transaction involves both current on-demand software solutions and on-demand software solutions that are under development;



The customer requires significant modifications, configurations or complex interfaces that could delay delivery or acceptance of our solutions;



The transaction involves extended payment terms;



The transaction involves acceptance criteria or other terms that may delay revenue recognition; or



The transaction involves performance milestones or payment terms that depend upon the resolution of contingencies.

Because of these factors and other specific revenue recognition requirements under generally accepted accounting principles in the United
States, or GAAP, we must have very precise terms in our contracts in order to recognize revenue when we initially provide access to our software solutions or perform services. Although we strive to enter into agreements that meet the criteria under
GAAP for current revenue recognition on delivered elements, our agreements are often subject to negotiation and revision based on the demands of our customers. The final terms of our agreements sometimes result in deferred revenue recognition well
after the time of delivery, which may adversely affect our financial results in any given period. In addition, because of prevailing economic conditions, more customers may require extended payment terms, shorter term contracts or alternative
licensing arrangements that could reduce the amount of revenue we recognize upon delivery of our solutions and could adversely affect our short-term profitability.

Furthermore, the presentation of our financial results requires us to make estimates and assumptions that may affect revenue recognition. In
some instances, we could reasonably use different estimates and assumptions, and changes in estimates are likely to occur from period to period. Accordingly, actual results could differ significantly from our estimates.

As of February 28, 2013, our net operating loss, or NOL, carryforward amounts for U.S. federal income and state tax purposes were
approximately $318.3 million and $100.3 million. Under Section 382 of the Internal Revenue Code, a corporation that undergoes an ownership change may be subject to limitations on its ability to utilize its pre-change NOLs to
offset future taxable income. In general, an ownership change occurs if the aggregate stock ownership of certain stockholders (generally 5% stockholders, applying certain look-through and aggregation rules) increases by more than 50% over such
stockholders lowest percentage ownership during the testing period (generally three years). We believe that there was an ownership change in a prior year, which resulted in an annual NOL limitation. In addition, new issuances of our common
stock, which is within our control, and purchases of our common stock in amounts greater than specified levels, which will be beyond our control, could create an additional limitation on our ability to utilize our NOLs for tax purposes in the
future. Limitations imposed on our ability to utilize NOLs could cause U.S. federal and state income taxes to be paid earlier than would be paid if such limitations were not in effect and could cause such NOLs to expire unused, in each case reducing
or eliminating the benefit of such NOLs. Furthermore, we may not be able to generate sufficient taxable income to utilize our NOLs before they expire. If any of these events occur, we may not derive some or all of the expected benefits from our
NOLs. In addition, at the state level there may be periods during which the use of NOLs is suspended or otherwise limited, which would accelerate or may permanently increase state taxes owed.

A failure to protect the integrity and security of our customers information could expose us to
litigation, materially damage our reputation and harm our business. Furthermore, the unanticipated costs of protecting against such a failure could adversely affect our results of operations.

Our business involves the collection and use of confidential information of our customers and their trading partners. We cannot assure you that
our efforts to protect this confidential information will be successful. If any compromise of this information security were to occur, we could be subject to legal claims and government action, experience an adverse effect on our reputation and need
to incur significant additional costs to protect against similar information security breaches in the future, each of which could adversely affect our financial condition, results of operations and growth prospects. In addition, because of the
critical nature of data security, any perceived breach of our security measures could cause existing or potential customers not to use our solutions and could harm our reputation.

Evolving regulation of the Internet may increase our expenditures related to compliance efforts, which may adversely affect our financial condition.

As Internet commerce continues to evolve, increasing regulation by federal, state or foreign agencies becomes more likely. We are
particularly sensitive to these risks because the Internet and cloud computing are critical components of our business model. For example, we believe that increased regulation is likely in the area of data privacy on the Internet, and laws and
regulations applying to the solicitation, collection, processing or use of personal or consumer information could affect our customers ability to use and share data, potentially reducing demand for solutions accessed via the Internet and
restricting our ability to store, process and share data with our clients via the Internet. In addition, taxation of services provided over the Internet or other charges imposed by government agencies or by private organizations for accessing the
Internet may be imposed. Any regulation imposing greater fees for Internet use or restricting information exchange over the Internet could result in a decline in the use of the Internet and the viability of Internet-based services, which could harm
our business.

If we fail to protect our intellectual property and proprietary rights adequately, our business could be adversely affected.

We believe that proprietary technology is essential to establishing and maintaining our leadership position. We seek to protect
our intellectual property through trade secrets, copyrights, confidentiality, non-compete and nondisclosure agreements, patents, trademarks, domain names and other measures, some of which afford only limited protection. We also rely on patent,
trademark, trade secret and copyright laws to protect our intellectual property. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our technology or to obtain and use information that we
regard as proprietary. We cannot assure you that our means of protecting our proprietary rights will be adequate or that our competitors will not independently develop similar or superior technology or design around our intellectual property. In
addition, the laws of some foreign countries do not protect our proprietary rights to as great an extent as the laws of the United States. Intellectual property protections may also be unavailable, limited or difficult to enforce in some countries,
which could make it easier for competitors to capture market share. Our failure to adequately protect our intellectual property and proprietary rights could adversely affect our business, financial condition and results of operations.

An assertion by a third party that we are infringing its intellectual property could subject us to costly and time-consuming litigation or expensive
licenses which could harm our business.

The industries in which we compete are characterized by the existence of a large number of
patents, copyrights, trademarks and trade secrets and by frequent litigation based on allegations of infringement or other violations of intellectual property rights. As we seek to extend our solutions, we could be constrained by the intellectual
property rights of others. In addition, our customer contracts require us to indemnify our customers against certain liabilities they may incur as a result of our infringement of any third-party intellectual property.

We might not prevail in any intellectual property infringement litigation given the complex technical issues and inherent uncertainties in
such litigation. Defending such claims, regardless of their merit, could be time-consuming and distracting to management, result in costly litigation or settlement, cause development delays or require us to enter into royalty or licensing
agreements. Furthermore, if our solutions exceed the scope of in-bound licenses or violate any third-party proprietary rights, we could be required to withdraw those solutions from the market, re-develop those solutions or seek to obtain licenses
from third parties, which might not be available on reasonable terms or at all. Any efforts to re-develop our solutions, obtain licenses from third parties on favorable terms or license a substitute technology might not be successful and, in any
case, might substantially increase our costs and harm our business, financial condition and results of operations. If we were compelled to withdraw any of our solutions from the market, our business, financial condition and results of operations
could be harmed.

The use of open source software in our products may expose us to additional risks and harm our intellectual
property.

We incorporate open source software into our platform. Given the nature of open source software, third parties might
assert copyright and other intellectual property infringement claims against us based on our use of certain open source software programs. The terms of many open source licenses to which we are subject have not been interpreted by U.S. or foreign
courts, and there is a risk that those licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to commercialize our solutions. In that event, we could be required to seek licenses from third
parties in order to continue offering our solutions, to re-develop our solutions, to discontinue sales of our solutions or to release our proprietary software code under the terms of an open source license, any of which could adversely affect our
business.

Some of our products use or incorporate software that is subject to one or more open source licenses. Open source software is
typically freely accessible, usable and modifiable. Certain open source software licenses require a user who intends to distribute the open source software as a component of the users software to disclose publicly part or all of the source
code to the users software. In addition, certain open source software licenses require the user of such software to make any derivative works of the open source code available to others on unfavorable terms or at no cost. This can subject
previously proprietary software to open source license terms.

While we monitor the use of all open source software in our products,
processes and technology and try to ensure that no open source software is used in such a way as to require us to disclose the source code to the related product or solution when we do not wish to do so, such use may have inadvertently occurred in
deploying our proprietary solutions. Additionally, if a third-party software provider has incorporated certain types of open source software into software we license from such third party for our products and solutions, we could, under certain
circumstances, be required to disclose the source code to our products and solutions. This could harm our intellectual property position and have a material adverse effect on our business, results of operations and financial condition.

Our strategy has included and will continue to include pursuing acquisitions and our potential inability to successfully integrate newly-acquired
companies or businesses may adversely affect our financial results.

We believe part of our growth will be driven by acquisitions
of other companies or their businesses. We recently completed the acquisition of ICON, our largest transaction to date. Our acquisitions, including ICON, entail a high degree of risk and may not generate the financial returns we expect. Any
acquisitions we complete will give rise to risks, including:

Finding that the acquired company, asset or technology does not further our business strategy, that we overpaid for the company, asset or technology or that we may be required to write off acquired assets or investments
partially or entirely;

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Not realizing the expected synergies of the transaction;

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Facing delays in customer purchases due to difficulty in retaining customers of acquired businesses;



Exposure to unforeseen liabilities and contingencies that were not identified prior to acquiring the company; and



An inability to generate sufficient revenue from acquisitions to offset the associated acquisition costs.

Fully integrating an acquired company or business into our operations may take a significant amount of time. We cannot assure you that we will
be successful in overcoming these risks or any other problems encountered with acquisitions. To the extent we do not successfully avoid or overcome the risks or problems related to any acquisitions, our results of operations and financial condition
could be adversely affected. Acquisitions also could impact our financial position and capital needs, and could cause substantial fluctuations in our quarterly and annual results of operations. Acquisitions could include significant goodwill and
intangible assets, which may result in future impairment charges that would reduce our stated earnings. We may incur significant costs in our efforts to engage in strategic transactions and these expenditures may not result in successful
acquisitions.

Future acquisitions of technologies or companies, which are paid for partially or entirely through the issuance of stock or stock
rights, could dilute the ownership of our existing stockholders.

We expect that the consideration we might pay for any future
acquisitions of companies or technologies could include stock, rights to purchase stock, cash or some combination of the foregoing. In July 2013, we issued 451,593 shares of our common stock as partial consideration in connection with the
acquisition of ICON. If we issue stock or rights to purchase stock in connection with future acquisitions, net income (loss) per share and then-existing holders of our common stock may experience dilution.

Mergers or other strategic transactions involving our competitors could weaken our competitive position, which could harm our results of operations.

Our industry is highly fragmented, and we believe it is likely that some of our existing competitors will consolidate or will be
acquired. In addition, some of our competitors may enter into new alliances with each other or may establish or strengthen cooperative relationships with systems integrators, third-party consulting firms or other parties. Any such consolidation,
acquisition, alliance or cooperative relationship could lead to pricing pressure and our loss of market share and could result in a competitor with greater financial, technical, marketing, service and other resources, all of which could have a
material adverse effect on our business, results of operations and financial condition.

We may not receive significant revenue as a result of our
current research and development efforts.

We have made and expect to continue to make significant investments in research and
development and related product opportunities. For the six months ended August 31, 2013, we spent $8.6 million on research and development expenses. High levels of expenditures for research and development could adversely affect our
results of operations if not offset by corresponding future revenue increases. We believe that we must continue to dedicate a significant amount of resources to our research and development efforts to maintain our competitive position. However, it
is difficult to estimate when, if ever, we will receive significant revenue as a result of these investments.

We incur increased costs and demands upon management as a result of complying with the laws and regulations
affecting public companies, which could adversely affect our results of operations and our ability to attract and retain qualified executives and board members.

As a public company, we incur legal, accounting and other expenses that we did not incur as a private company, including costs associated with
public company reporting and corporate governance requirements. These requirements include compliance with Section 404 and other provisions of the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act
(Dodd-Frank Act), as well as rules implemented by the Securities and Exchange Commission (SEC), the NASDAQ Stock Market (NASDAQ), and other applicable securities or exchange-related rules and regulations. In
addition, our management team also has to adapt to the requirements of being a public company. We expect complying with these rules and regulations will substantially increase our legal and financial compliance costs and to make some activities more
time-consuming and costly.

The increased costs associated with operating as a public company decreases our net income or increase our net
loss, and may require us to reduce costs in other areas of our business or increase the prices of our products or services. Additionally, if these requirements divert our managements attention from other business concerns, our results of
operations could be adversely effected.

However, for as long as we remain an emerging growth company as defined in the
Jumpstart Our Business Startups Act of 2012 (JOBS Act), we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies
including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy
statements, and exemptions from the requirements of holding an annual nonbinding advisory vote on executive compensation and seeking nonbinding stockholder approval of any golden parachute payments not previously approved. We may take advantage of
these reporting exemptions until we are no longer an emerging growth company.

We will remain an emerging growth
company for up to five years, although we would cease to be an emerging growth company prior to such time if we have more than $1.0 billion in annual revenue, more than $700 million in market value of our common stock is held by
non-affiliates or we issue more than $1.0 billion of non-convertible debt over a three-year period.

As a public company, it is more
difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it
may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as our executive officers.

We rely
significantly on recurring revenue, which may decline or fail to be renewed, and our future results of operations could be harmed.

Our revenue from subscriptions to our software and software-related support services accounted for approximately 76.5% of our total revenue for
the six months ended August 31, 2013. Revenue from our subscriptions is recognized over the contractual term of the license, which is typically three to five years, and is generally recurring in nature. Sales of new or recurring subscriptions
and software-related support service contracts and renewals after expiration of the initial term may decline or fluctuate as a result of a number of factors, including end customers level of satisfaction with our software solutions, the prices
of our software solutions, the prices of products and services offered by our competitors or reductions in our customers spending levels. A software industry-wide movement towards shorter contractual license terms led by other SaaS providers,
which competitive pressures may compel us to follow, could lead to increased volatility and diminished visibility into future recurring revenue. If our sales of new or recurring subscriptions and software related support service contracts decline,
our revenue and revenue growth may decline, and our business will suffer.

Because we recognize certain revenue from subscriptions and support
services over the term of the relevant service period, downturns or upturns in sales are not immediately fully reflected in our results of operations.

We recognize recurring subscriptions and software-related support services revenue monthly over the term of the relevant service period, which
is typically three years. As a result, much of the revenue we report each quarter is the recognition of deferred revenue from recurring subscriptions and software-related support service contracts entered into during previous quarters. Consequently,
a decline in new or renewed recurring subscriptions and software-related support service contracts in any one quarter will not be fully reflected in revenue in that quarter, but will negatively affect our revenue in future quarters. Accordingly, the
effect of significant downturns in new or renewed sales of our recurring subscriptions and software-related support services are not reflected in full in our results of operations until future periods. Revenue from our recurring subscriptions and
software-related support services also makes it difficult for us to rapidly increase our revenue through additional service sales in any period, as revenue from new and renewal software-related service contracts must be recognized over the
applicable service period.

Our failure to raise additional capital or generate cash flows necessary to expand our operations and
invest in new technologies in the future could reduce our ability to compete successfully and adversely affect our results of operations.

We may need to raise additional funds, and we may not be able to obtain additional debt or equity financing on favorable terms, if at all. If
we raise additional equity financing, our security holders may experience significant dilution of their ownership interests and the value of shares of our common stock could decline. If we engage in debt financing, we may be required to accept terms
that restrict our ability to incur additional indebtedness, force us to maintain specified liquidity or other ratios or restrict our ability to pay dividends or make acquisitions. If we need additional capital and cannot raise it on acceptable
terms, if at all, we may not be able to, among other things:

Respond to competitive pressures or unanticipated working capital requirements; or



Pursue acquisition opportunities.

Our inability to do any of the foregoing could reduce our
ability to compete successfully and adversely affect our results of operations.

Because our long-term success depends, in part, on our ability to
expand the sales of our solutions to customers located outside of the United States, our business will be susceptible to risks associated with international operations.

We have limited experience operating in foreign jurisdictions. Conducting and launching operations on an international scale requires close
coordination of activities across multiple jurisdictions and time zones and consumes significant management resources. Customers in countries outside of the United States accounted for 36.0% of our total revenue for the fiscal year ended February
28, 2013 and 22.8% of our total revenue for the six months ended August 31, 2013. The decrease was due to revenue associated with a contract amendment that was accelerated into the three months ended August 31, 2012, which would have been
recognized in the remainder of fiscal 2013 through fiscal 2015 as discussed in the section titled Managements Discussion and Analysis of Financial Condition and Results of Operations, and timing of deployment of professional services. Our
limited experience in operating our business outside of the United States increases the risk that our current and any future international expansion efforts will not be successful. Conducting international operations subjects us to new risks that,
generally, we have not faced in the United States, including:

Political, social and economic instability abroad, terrorist attacks and security concerns in general; and



Reduced or varied protection for intellectual property rights in some countries.

The
occurrence of any one of these risks could negatively affect our international business and, consequently, our results of operations generally. Additionally, operating in international markets also requires significant management attention and
financial resources. We cannot be certain that the investment and additional resources required in establishing, acquiring or integrating operations in other countries will produce desired levels of revenue or profitability.

From time to time, we may become defendants in legal proceedings as to which we are unable to assess our exposure and which could become significant
liabilities in the event of an adverse judgment.

We may become defendants in legal proceedings from time to time. Companies in our
industry have been subject to claims related to patent infringement and product liability, as well as contract and employment-related claims. We may not be able to accurately assess the risk related to these suits, and we may be unable to accurately
assess our level of exposure.

We are required to comply with U.S. export control laws and regulations. Noncompliance with those laws and
regulations could have a material adverse effect on our business.

Our solutions are subject to U.S. export controls and we
incorporate encryption technology into certain of our solutions. These encrypted solutions and the underlying technology may be exported outside the United States only with the required export authorizations, including by license, a license
exception or other appropriate government authorizations, including the filing of an encryption registration. U.S. export control laws and economic sanctions prohibit the shipment of certain solutions and services to U.S. embargoed or sanctioned
countries, governments and persons and complying with export control and sanctions regulations for a particular sale may be time-consuming and may result in the delay or loss of sales opportunities. Penalties for violations of the U.S. export
control laws include fines of up to $250,000 or twice the value of the transaction, whichever is greater, per violation, the possible loss of export or import privileges and criminal action for knowing or willful violations.

Further, if our operating partners fail to obtain appropriate import, export or re-export licenses or permits, we may also be adversely
affected, become the subject of government investigations or penalties, and incur reputational harm.

In addition, various countries
regulate the import of certain encryption technology, including import permitting and licensing requirements, and have enacted laws that could limit our ability to sell our solutions or could limit our customers ability to implement our
solutions in those countries. Changes in our solutions or changes in export and import regulations may create delays in the introduction of our solutions in international markets, prevent our customers with international operations from deploying
our solutions globally or, in some cases, prevent the export or import of our solutions to certain countries, governments or persons altogether. Any change in export or import regulations, economic sanctions or related legislation, shift in the
enforcement or scope of existing regulations, or change in the countries, governments, persons or technologies targeted by such regulations, could result in decreased use of our solutions by, or in our decreased ability to export or sell our
solutions to, existing or potential customers with international operations. Any decreased use of our solutions or limitation on our ability to export or sell our solutions would likely adversely affect our business, financial condition and results
of operations.

Our facilities in California are located near known earthquake faults, and the occurrence of an earthquake or other catastrophic
disaster could cause damage to our facilities and equipment, which could negatively impact our operations.

Our facilities in the
San Francisco Bay Area are located near known earthquake fault zones and are vulnerable to damage from earthquakes. We are also vulnerable to damage from other types of disasters, including fire, floods, power loss, communications failures and
similar events. If any disaster were to occur, our ability to operate our business at our facilities would be seriously, or potentially completely, impaired. The insurance we maintain may not be adequate to cover our losses resulting from disasters
or other business interruptions. Accordingly, an earthquake or other disaster could materially and adversely harm our ability to conduct business.

We are subject to income, sales, use, value added and other taxes in the United States and other countries in which we conduct business, which
such laws and rates vary greatly by jurisdiction. Certain jurisdictions in which we do not collect sales, use, value added or other taxes on our sales may assert that such taxes are applicable, which could result in tax assessments, penalties and
interest, and we may be required to collect such taxes in the future. Significant judgment is required in determining our worldwide provision for income taxes. These determinations are highly complex and require detailed analysis of the available
information and applicable statutes and regulatory materials. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. Although we believe our tax estimates are
reasonable, the final determination of tax audits and any related litigation could be materially different from our historical tax practices, provisions and accruals. If we receive an adverse ruling as a result of an audit, or we unilaterally
determine that we have misinterpreted provisions of the tax regulations to which we are subject, there could be a material effect on our tax provision, net income or cash flows in the period or periods for which that determination is made. In
addition, liabilities associated with taxes are often subject to an extended or indefinite statute of limitations period. Therefore, we may be subject to additional tax liability (including penalties and interest) for a particular year for extended
periods of time.

Changes in existing financial accounting standards or practices, or taxation rules or practices, may adversely affect our results
of operations.

Changes in existing accounting or taxation rules or practices, new accounting pronouncements or taxation rules, or
varying interpretations of current accounting pronouncements or taxation practice could have a significant adverse effect on our results of operations or the manner in which we conduct our business. Further, such changes could potentially affect our
reporting of transactions completed before such changes are effective.

Risks Relating to Owning Our Common Stock

Our share price may be volatile.

The market price of our common stock could be subject to wide fluctuations in response to many risk factors listed in this section, and others
beyond our control, including:



Actual or anticipated fluctuations in our financial condition and results of operations;

The expiration of contractual lock-up agreements with our executive officers, directors and stockholders; and

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General economic and market conditions.

Furthermore, the stock markets have experienced
extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those
companies. These broad market and industry fluctuations, as well as general economic, political and market conditions such as recessions, interest rate changes or international currency fluctuations, may negatively impact the market price of our
common stock. In the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation
against us could result in substantial costs and divert our managements attention from other business concerns, which could seriously harm our business.

If securities or industry analysts do not publish research or reports about our business, or publish negative reports about our business, our share
price and trading volume could decline.

The trading market for our common stock will depend on the research and reports that
securities or industry analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade our shares or change their opinion of our shares, our share price would likely
decline. If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.

Future sales of our common stock in the public market could cause our share price to fall.

Sales of a substantial number of shares of our common stock in the public market, or the perception that these sales might occur, could depress
the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. In addition, certain holders of our shares of common stock will be entitled to rights with respect to registration
of such shares under the Securities Act pursuant to a registration rights agreement between such holders and us and pursuant to the acquisition agreement between us and ICON. If such holders, by exercising their registration rights, sell a large
number of shares, the market price for our common stock could be adversely affected. If we file a registration statement for the purpose of selling additional shares to raise capital and are required to include shares held by these holders pursuant
to the exercise of their registration rights, our ability to raise capital may be impaired.

All of the common stock sold in our IPO in
July 2012 is freely tradable without restrictions or further registration under the Securities Act of 1933, as amended, or the Securities Act, except for any shares held by our affiliates as defined in Rule 144 under the Securities Act.

We filed a registration statement on Form S-8 under the Securities Act to register shares for issuance under our 2003 Stock Plan and 2012
Equity Compensation Plan. Our 2012 Equity Compensation Plan provides for automatic increases in the shares reserved for issuance under the plan which could result in additional dilution to our stockholders. These shares can be freely sold in the
public market upon issuance and vesting, subject to a lock-up period and other restrictions provided under the terms of the applicable plan and/or the option agreements entered into with option holders.

We may also issue shares of our common stock or securities convertible into our common stock from time to time in connection with a financing,
acquisition or otherwise. Any such issuance could result in substantial dilution to our existing stockholders and cause the trading price of our common stock to decline.

As a result of becoming a public company, we are obligated to develop and maintain a system of effective
internal controls over financial reporting. We may not complete our analysis of our internal control over financial reporting in a timely manner, or these internal controls may not be determined to be effective, which may adversely affect investor
confidence in our company and, as a result, the value of our common stock.

We are required, pursuant to Section 404 of the
Sarbanes-Oxley Act of 2002, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting in the second annual report we file with the SEC. This assessment will need to include
disclosure of any material weaknesses identified by our management in our internal control over financial reporting, as well as a statement that our auditors have issued an attestation report on effectiveness of our internal controls. However, our
auditors will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 until we are no longer an emerging growth company as defined in the JOBS Act if we take
advantage of the exemptions available to us through the JOBS Act.

We are in the very early stages of the costly and challenging process
of compiling the system and processing documentation necessary to perform the evaluation needed to comply with Section 404. We may not be able to remediate future material weaknesses, or to complete our evaluation, testing and any required
remediation in a timely fashion. During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal controls are effective. If we
are unable to assert that our internal control over financial reporting is effective, or if our auditors are unable to express an opinion on the effectiveness of our internal controls, we could lose investor confidence in the accuracy and
completeness of our financial reports, which would have a material adverse effect on the price of our common stock.

We are an emerging growth
company and we cannot be certain whether the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are an emerging growth company, as defined in the JOBS Act, and we may take advantage of certain exemptions from various
reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the
Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding an annual non-binding advisory vote on executive compensation and
nonbinding stockholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions. If some investors find our common stock
less attractive as a result, there may be a less active trading market for our common stock and our stock price may become more volatile.

In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until
those standards would otherwise apply to private companies. However, we have chosen to opt out of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which
adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

Our directors, executive officers and principal stockholders have substantial control over us and could
delay or prevent a change in corporate control.

As of August 31, 2013, our executive officers and directors, and entities
that are affiliated with them, beneficially owned (as determined in accordance with the rules of the SEC) an aggregate of 28.0% of our outstanding common stock. As a result, these stockholders, acting together, have the ability to control the
outcome of matters submitted to our stockholders for approval, including the election of directors and any merger, consolidation or sale of all or substantially all of our assets. In addition, these stockholders, acting together, would have the
ability to control the management and affairs of our company. Accordingly, this concentration of ownership might harm the market price of our common stock by:

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Delaying, deferring or preventing a change in corporate control;

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Impeding a merger, consolidation, takeover or other business combination involving us; or

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Discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us.

Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us,
which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management and limit the market price of our common stock.

Provisions in our amended and restated certificate of incorporation and bylaws may have the effect of delaying or preventing a change of
control or changes in our management. Our amended and restated certificate of incorporation and bylaws include provisions that:

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Authorize our board of directors to issue, without further action by the stockholders up to 10,000,000 shares of undesignated preferred stock;

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Require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent;

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Specify that special meetings of our stockholders can be called only by our board of directors, the Chairman of the Board, the Chief Executive Officer or the President;

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Establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our board of directors;

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Provide that directors may be removed only for cause;

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Provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum;

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Establish that our board of directors is divided into three classes  Class I, Class II and Class III  with each class serving staggered terms; and

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Require a super-majority of votes to amend certain of the above-mentioned provisions.

These
provisions, alone or together, could delay or prevent hostile takeovers and changes in control. These provisions may also frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult
for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management.

As a
Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation law, which prevents some stockholders holding more than 15% of our outstanding common stock from engaging in
certain business combinations without approval of the holders of substantially all of our outstanding common stock.

Any provision of our
amended and restated certificate of incorporation or bylaws or Delaware law that has the effect of delaying or deterring a change of control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock,
and could also affect the price that some investors are willing to pay for our common stock.

We have never declared or paid any cash dividends on our common stock and do not intend to pay any cash dividends in the foreseeable future. We
anticipate that we will retain all of our future earnings for use in the operation of our business and for general corporate purposes. Any determination to pay dividends in the future will be at the discretion of our board of directors. Accordingly,
investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

On July 30, 2013, the
Company issued 451,593 shares of Company common stock in connection with the acquisition of ICON, in a private transaction exempt from the registration requirements of the Securities Act pursuant to Section 4(2) and/or Regulation S under the
Securities Act. See Note 3, Acquisition, of Notes to Condensed Consolidated Financial Statements for further details on the transaction.

Item 6.

Exhibits.

The exhibits listed in the accompanying Exhibit Index are filed or
incorporated by reference as part of this Quarterly Report.

In accordance with Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of
1933, are deemed not filed for purposes of section 18 of the Exchange Act of 1934, and otherwise are not subject to liability under these sections.

(1)

The certifications attached as Exhibit 32.1 accompany this Quarterly Report on Form 10-Q pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not
be deemed filed by the registrant for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended.